United Kingdom: Selected Issues
Volume/Issue:
Volume 2003
Issue 047
Publication date: March 2003
ISBN: 9781451814170
$20.00
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Topics covered in this book
This title contains information about the following subjects.
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Inflation , Investments and Securities-General , Economics- Macroeconomics , ISCR , CR , right , price , investment , nominal interest rate , productivity gap , equipment investment , U , K , productivity performance , investment ratio , U , K , ratio , U , K , investment , Housing prices , Total factor productivity , Labor productivity , Capital productivity , Europe , Australia and New Zealand
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Summary
This Selected Issues paper examines the factors determining housing prices in the United Kingdom. Based on econometric evidence, the paper assesses whether recent housing price increases can be explained by fundamentals or whether they represent a temporary overshooting of housing prices, characteristic of a bubble. The paper estimates a simple error-correction model that describes the dynamics of real housing prices since the 1970s. Estimation results suggest that earnings and interest rates are the key determinants of housing prices, and that changes in real housing prices exhibit a large degree of persistence.
