Residential Investment and Business Cycles in an Open Economy: A Generalized Impulse Response Approach

摘要

We study the impact of residential and non-residential investment on economic growth using U.S. data. Unlike previous studies we include the external sector (net exports) in our estimations, and we calculate impulse response analysis using Pesaran and Shin's (Economics Letters 58:17-29, 1998) generalized impulse response approach. We find that shocks to residential investment have a larger impact on GDP than shocks to non-residential investment, which supports the findings of the closed-economy approach of Coulson and Kim (Real Estate Economics 28:233-247, 2000). However, a closed economy model tends to overstate the importance of residential investment and understate the relevance of nonresidential investment.