RBA paper offers new way to add housing sector to DSGE models

Research published by the Reserve Bank of Australia outlines a new method of integrating a housing sector into large-scale economic models.

The discussion paper, by Christopher Gibbs, Jonathan Hambur and Gabriela Nodari, proposes a dynamic stochastic general equilibrium model in which housing is represented on both the production and consumption sides of the economy. On the production side, there is a housing services sector, while on the consumption side, households gain additional utility