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Federal Reserve Bank of San Francisco
Working Paper Series
Land Prices and Unemployment
Zheng Liu
Jianjun Miao
Tao Zha

We integrate the housing market and the labor market in a dynamic general equilibrium model with credit and search frictions. The model is confronted with the U.S. macroeconomic time series. Our estimated model can account for two prominent facts observed in the data. First, the land price and the unemployment rate tend to move in opposite directions over the business cycle. Second, a shock that moves the land price is capable of generating large volatility in unemployment. Our estimation indicates that a 10 percent drop in the land price leads to a 0.34 percentage point increase of the unemployment rate (relative to its steady state).

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Zheng Liu & Jianjun Miao & Tao Zha, Land Prices and Unemployment, Federal Reserve Bank of San Francisco, Working Paper Series 2013-22, 2013, revised 01 Mar 2016.
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Keywords: Housing; Labor market
DOI: 10.24148/wp2013-22
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