No abstract

We analyze relationships between housing supply elasticities, land costs and house price dynamics, contributing three main insights. First, higher housing supply elasticities help contain short-run price spikes following demand shocks. Second, land price dynamics influence this relationship; supply responses are lessened and house price spikes are exacerbated as land prices increase. Third, we estimate a system of regional equations modeling housing supply using a Tobin's-"q" specification (incorporating construction and land costs) and show that regional price dynamics are a function of the region's supply elasticity. Copyright (c) 2010 American Real Estate and Urban Economics Association.

An efficient housing market is of critical importance for individual welfare and for a well-functioning economy. We test the efficiency of this market by estimating the factors that determine both the long-run and the dynamic paths of regional house prices. Our tests use a new quarterly regional panel data set covering the 14 regions of New Zealand from 1981 to 2002. The tests indicate that regional housing markets converge to an equilibrium consistent with consumer optimising conditions, and hence with long-run efficiency. However, some conditions required for short-run (dynamic) efficiency are violated. We find that extrapolative price expectations, based on past regional phenomena, lead to overshooting of house prices in response to new region-specific information. We also find that price dynamics are influenced by past regional house sales activity and that the dynamic adjustment process is asymmetric depending on whether house prices are above or below their long-run equilibrium.

Gross Domestic Product (GDP) is often treated as shorthand for national economic well-being, even though it was never intended to be; it is a measure of (some) of the marketable output of the economy. This paper reviews several developments in measuring welfare beyond GDP that were recently presented at the Economic Statistics Centre of Excellence (ESCoE) annual conference in May 2019. The papers discussed fall into three broad areas. First, a significant amount of work has focused on incorporating information about the distribution of income, consumption and wealth in the national accounts. Second, the effects of digitisation and the growth of the internet highlight the potential value in measuring time use as a measure of welfare. Third, the digital revolution has spawned many new, often ‘free’ goods, the welfare consequences of which are difficult to measure. Other areas, such as government services, are also difficult to measure. Measuring economic welfare properly matters because it affects the decisions made by government and society. GDP does a reasonable job of measuring the marketable output of the economy (which remains important for some policies), but it should be downgraded; more attention should be given to measures that reflect both objective and subjective measures of well-being, and measures that better reflect the heterogeneity of peoples' experiences.