Learning about the Neighborhood / Zhenyu Gao, Michael Sockin, Wei Xiong.

Format:

Book

Author/Creator:

Gao, Zhenyu.

Contributor:

National Bureau of Economic Research.

Sockin, Michael.

Xiong, Wei.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26907.

NBER working paper series no. w26907

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2020.

Summary:

We develop a model to analyze information aggregation and learning in housing markets. In the presence of pervasive informational frictions, housing prices serve as important signals to households and capital producers about the economic strength of a neighborhood. Our model provides a novel mechanism for amplification through learning in which noise from the housing market can propagate to the local economy, distorting not only migration into the neighborhood, but also the supply of capital and labor. We provide consistent evidence of our model implications for housing price volatility and new construction using data from the recent U.S. housing cycle.

Notes:

Print version record

March 2020.