On the link between policy uncertainty and housing permits: asymmetric evidence from state-level data in the USA
International Journal of Housing Markets and Analysis
ISSN: 1753-8270
Article publication date: 2 April 2021
Issue publication date: 12 November 2021
Abstract
Purpose
The purpose of this study is to assess the symmetric and asymmetric impact of a measure of policy uncertainty on house permits issued in each state of the USA.
Design/methodology/approach
To assess the symmetric effects, the authors use Pesaran et al.’s (2001) linear autoregressive distributed lag (ARDL) approach to error-correction modeling. To assess the asymmetric effects, they rely upon Shin et al.’s (2014) nonlinear ARDL approach to error-correction modeling. Both approaches have the advantage of producing short-run and long-run effects in one step.
Findings
The authors find short-run symmetric effects of policy uncertainty on house permits issued in 22 states that lasted into the long run in three states only. However, the numbers were much higher when they estimated the possibility of asymmetric effects of policy uncertainty. Indeed, they found short-run asymmetric effects in 38 states and long-run asymmetric effects in 18 states.
Originality/value
Some previous studies assessed the effects of a measure of policy uncertainty on house prices. In this paper, the authors extend the same analysis to the supply side of the housing market by assessing the effects of policy uncertainty on house permits in each state of the USA.
Keywords
Acknowledgements
All views and information expressed on this paper do not represent the opinions of any entity whatsoever with which the author has been, is now, or will be affiliated. Authors would like to thank valuable comments from two anonymous reviewers without implicating them.
Citation
Bahaman-Oskooee, M., Ghodsi, H. and Hadzic, M. (2021), "On the link between policy uncertainty and housing permits: asymmetric evidence from state-level data in the USA", International Journal of Housing Markets and Analysis, Vol. 14 No. 5, pp. 1027-1041. https://doi.org/10.1108/IJHMA-07-2020-0090
Publisher
:Emerald Publishing Limited
Copyright © 2021, Emerald Publishing Limited