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Das House Kapital

Grossmann, Volker ; Larin, Benjamin ; Steger, Thomas

(Working Papers SES ; 523)

The housing wealth-to-income ratio has been increasing in most developed economies since the 1950s. We provide a novel theory to explain this long-term pattern. We show analytically that house prices grow in the steady state if i) the housing sector is more land-intensive than the non-housing sector, or ii) technological progress in the construction sector is weaker than in the non-housing...