| Sumario: | The purpose of this paper is to remove these data and methodological deficiencies and to offer new evidence on the effects of permanent income and housing price on the demand for housing. Section II reviews recent studies based on micro units, Section III describes the basic method of this study, Sections IV and V present empirical results and make comparisons with other estimates, and finally, Section VI provides the conclusions. <BR> In order to derive more conclusive evidence on the demand for housing, we introduced a number of innovations in this study. First, we incorporated the price of non-housing goods in the demand function for housing, thus avoiding a specification error present in other studies. Second, we employed a more rigorous estimation procedure using a lagged income of up to four years as the instrumental variable for permanent income. Third, we used various definitions of income and, in particular, the definition of full income that included a host of non-pecuniary incomes. Finally, we utilized the longest reinterview data (i.e., 5-year successive surveys) and the appropriate housing price data.
|
|---|