Note #0:
We will “kick off” this problem set in Monday’s class to ensure that everyone is comfortable and familiar with the general structure.
Note #1:
Because these problem sets are only available one week before the due date, there will be office hours on Monday evening and Wednesday afternoon.
Monday: Sever Hall 210 from 4-5:45pm
Wednesday: Sever Hall 310 from 4-5:45pm
Note #2:
If you run into an issue with this problem set (or find anything unclear), please email me. If you are confused, you are almost surely not the only one. Reaching out will let me make necessary “updates” to the problem set.
Please submit both your .Rmd source file and the knitted PDF.
There is a recent paper with an attention grabbing headline that Supply Constraints Do Not Explain House Price and Quantity Growth Across U.S. Cities. The authors begin the paper by writing, “In this paper we ask: do measured differences in housing supply elasticities explain differences in house price growth and housing quantity growth across U.S. cities since 2000?”
Their answer is No!
Our question — any reader’s question — is what does it mean for something to explain, or in this case, not explain something?
The authors write “We find that in response to higher income growth from 2000–2020, cities measured as having more-elastic housing supply show the same growth in house prices, quantities, population, rents, commuting times, and rooms per person as cities measured as having less-elastic housing supply.” In other words, after you condition on income growth, measures of housing elasticity is not informative about growth in housing prices and quantities.
Is this surprising and insightful? And if so, what are the implications for the housing market? In this problem set, we’ll “work through” the paper so that you can develop your own answer to these questions.