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Rental market and macroeconomics: evidence for the US

Vinicius Phillipe de Albuquerquemello (Department of Economics, Federal University of Pernambuco, Recife, Brazil) (Department of Applied Social Sciences, Federal University of Paraíba, Joao Pessoa, Brazil)
Cássio Besarria (Department of Economics, Federal University of Paraíba, Joao Pessoa, Brazil)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 10 August 2020

Issue publication date: 9 April 2021

141

Abstract

Purpose

The aim of this paper is to assess whether the inclusion of the rental housing market affect the dynamics of the real business cycles (RBCs).

Design/methodology/approach

For this investigation, the authors model and estimate two dynamic stochastic general equilibrium (DSGE) versions for the US economy, one with and one without the presence of residential rent.

Findings

The findings provide evidence that the inclusion of the rental housing market can improve the assessment of public policies and the projection of scenarios in the face of sudden macroeconomic shocks. The addition of this secondary housing market augments the effect of total factor productivity (TFP) shock on output and consumption. In addition, it increases the effect of the credit shock on the demand for housing. The latter highlights the role of credit for the real estate market. Therefore, the authors recommend that analysts and macro-prudential authorities consider adding it to their models.

Originality/value

The findings provide evidence that the inclusion of the rental housing market can improve the assessment of public policies and the projection of scenarios in the face of sudden macroeconomic shocks.

Keywords

Citation

de Albuquerquemello, V.P. and Besarria, C. (2021), "Rental market and macroeconomics: evidence for the US", Journal of Economic Studies, Vol. 48 No. 3, pp. 587-603. https://doi.org/10.1108/JES-01-2020-0003

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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