{"product_id":"finance-and-economics-discussion-series-joshua-gallin-9781288712069","title":"Finance and Economics Discussion Series: The Long-Run Relationship Between House Prices and Rents","description":"I show that when house prices are high relative to rents (that is, when the rent-price ratio is low) changes in real rents tend to be larger than usual and changes in real prices tend to be smaller than usual. Standard error-correction models provide inconclusive results about the predictive power of the rent-price ratio at a quarterly frequency. I use a long-horizon regression approach to show that the rent-price ratio helps predict changes in real rents and real prices over three-year periods. This result withstands the inclusion of a measure of the user cost of capital. I show that a long- horizon regression approach can yield biased estimates of the degree of error correction if prices have a unit root but do not follow a random walk. I construct bootstrap distributions to conduct appropriate inference in the presence of this bias. The results lend empirical support to the view that the rent-price ratio is an indicator of valuation in the housing market.\u003cbr\u003e\u003cbr\u003e\u003cb\u003eAuthor:\u003c\/b\u003e Joshua Gallin\u003cbr\u003e\u003cb\u003eISBN-10:\u003c\/b\u003e 1288712065\u003cbr\u003e\u003cb\u003eISBN-13:\u003c\/b\u003e 9781288712069\u003cbr\u003e\u003cb\u003ePublisher:\u003c\/b\u003e Bibliogov\u003cbr\u003e\u003cb\u003eLanguage:\u003c\/b\u003e English\u003cbr\u003e\u003cb\u003ePublished:\u003c\/b\u003e 02\/06\/2013\u003cbr\u003e\u003cb\u003ePages:\u003c\/b\u003e 32\u003cbr\u003e\u003cb\u003eFormat:\u003c\/b\u003e Paperback\u003cbr\u003e\u003cb\u003eWeight:\u003c\/b\u003e 0.17lbs\u003cbr\u003e\u003cb\u003eSize:\u003c\/b\u003e 9.69h x 7.44w x 0.07d","brand":"Joshua Gallin","offers":[{"title":"Paperback","offer_id":48994611495167,"sku":"9781288712069","price":15.75,"currency_code":"USD","in_stock":true}],"url":"https:\/\/www.whiterainbookhouse.com\/products\/finance-and-economics-discussion-series-joshua-gallin-9781288712069","provider":"WR Book House","version":"1.0","type":"link"}