| Abstract: |
The model of Hendry (1986) is extended to a vector autoregressive system, in order to examine the sources of fluctuations in
housing completions and inventory. The time series properties of the completion rate are examined as well as those of the
accumulated inventory. Shock to income, interest rates, materials price and housing price are examined. The completion rate
appears to be more or less constant, unaffected by these shocks, so that inventory is evidently the control variable for builders.
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