Abstract
Using the asset market equilibrium approach, the effects of Financial Regulations, Reform, Recovery, and Enforcement Act (1989), of the new housing selling time, and of the commercial paper–Treasury Bill spread, through the credit markets, on total and speculative single-family housing construction are investigated. A new speculative single-family housing starts series is developed for this analysis. The credit-market factors appear to affect both the cost of construction loans and the price elasticity of single-family housing construction. These effects are especially strong on speculative housing construction.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Reference
Able, Andrews B. (1980). ``Empirical Investment Equations: An Integrative Framework,'' Carnegie-Rochester Conference Series on Public Policy12(Spring),39–91.
Avery, Robert. (1979). ``Modeling Monetary Policy as an Unobserved Variable,'' Journal of Econometrics1, 291–311.
Balke, Nathan S., and Kenneth M. Emery. (1994). ``The Federal Funds Rate as an Indicator of Monetary Policy: Evidence from the 1980s,'' Economic Review Federal Reserve Bank of Dallas1,1–15.
Bernanke, Ben S., and Alan S. Blinder. (1992). ``The Federal Funds Rate and the Channels of Monetary Transmission,'' American Economic Review82(September),901–921.
Brunner, Karl, and Allan H. Meltzer. (1988). ``Money and Credit in the Monetary Transmission Process,'' Papers and Proceedings, American Economic Review78(May),446–451.
Carpenter, Robert E., Steven M. Fazzari, and Bruce C. Petersen. (1994). ``Inventory Investment, Internal-Finance Fluctuations, and the Business Cycle,'' Brookings Papers on Economic Activity2,75–122.
Chan, Thomas S. F. (1996). ``Residential Construction, Liquidity Constraints, and Monetary Policy Transmission,'' Ph. D. Dissertation, Washington University in St. Louis.
Davidson, Russell, and James G. Mackinnon. (1993). Estimation and Inference in Econometrics. Oxford: Oxford University Press.
Duca, John V., and Stuart S. Rosenthal. (1991). ``An Empirical Test of Credit Rationing in the Mortgage Market,'' Journal of Urban Economics29,218–234.
Duca, John V., and Stuart S. Rosenthal. (1994). ``Borrowing Constraints and Access to Owner-Occupied Housing,'' Regional Science and Urban Economics24,301–322.
Fergus, James T., and John L. Goodman, Jr. (1994). ``The 1989–92 Credit Crunch for Real Estate: A Retrospective,'' Journal of the American Real Estate and Urban Economics Association22,5–32.
Friedman, Benjamin M., and Kenneth N. Kuttner. (1993). ``Economic Activity and the Short-Term Credit Markets: An Analysis of Prices and Quantities,'' Brookings Paper on Economic Activities2,193–285.
Gabriel, Stuart A., and Stuart S. Rosenthal. (1991). ``Credit Rationing, Race and the Mortgage Market,'' Journal of Urban Economics29,371–379.
Gertler, Mark. (1993). ``Comment: Economic Activity and the Short-term Credit Markets: An Analysis of Prices and Quantities,'' Brookings Paper on Economic Activities2,271–277.
Gertler, Mark, and Simon Gilchrist. (1994). ``Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms,'' Quarterly Journal of Economics109(May),309–340.
Gertler, Mark, and R. Glenn Hubbard. (1988). ``Financial Factors in Business Fluctuations,'' In Financial Volatility: A Symposium Sponsored by the Federal Reserve Bank of Kansas City (pp. 33–71). Kansas City, MO: Federal Reserve Bank of Kansas City Symposium Series.
Gordon, Robert J. (1971). ``Measurement Bias and Price Indexes for Capital Goods,'' Review of Income and Wealth17(June),121–174.
Hansen, Lars P. (1982). ``Large Sample Properties of Generalized Method of Moments Estimators,'' Econometrica50,1029–1054.
Kane, Edward. (1980). ``Politics and Fed Policymaking: The More Things Change the More They Remain the Same,'' Journal of Monetary Economics6,199–212.
Kashyap, Anil K., Jeremy C. Stein, and David W. Wilcox. (1993). ``Monetary Policy and Credit Conditions: Evidence from the Composition of External Finance,'' American Economic Review83(March),78–98.
Newey, W., and K. West. (1987). ``A Simple, Positive Semi-Definite, Heteroskedasticity and Autocorrelation Consistent Covariance Matrix,'' Econometrica55,703–708.
Romer, Christina D., and David H. Romer. (1990). ``New Evidence on the Monetary Transmission Mechanism,'' Brookings Papers on Economic Activity1,149–213.
Romer, Christina D., and David H. Romer. (1994). ``Monetary Policy Matters,'' Journal of Monetary Economics 34 (August),75–88.
Rosenthal, Stuart S., John V. Duca, and Stuart A. Gabriel. (1991). ``Credit Rationing and the Demand for Owner-Occupied Housing,'' Journal of Urban Economics29,218–234.
Stein, Jeremy C. (1989). ``Cheap Talk and the Fed: A Theory of Imprecise Policy Announcement,'' American Economic Review79,32–42.
Stiglitz, Joseph E., and Andrew Weiss. (1981). ``Credit Rationing in Markets with Imperfect Information,'' American Economic Review71,393–410.
Stover, Mark E. (1986). ``The Price Elasticity of the Supply of Single-Family Detached Urban Housing,'' Journal of Urban Economics20,331–340.
Woolley, John T. (1984). Monetary Politics: the Federal Reserve and the Politics of Monetary Policy. Cambridge: Cambridge University Press.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Chan, T.Sf. Residential Construction and Credit Market Imperfection. The Journal of Real Estate Finance and Economics 18, 125–139 (1999). https://doi.org/10.1023/A:1007793631962
Issue Date:
DOI: https://doi.org/10.1023/A:1007793631962