| Abstract: |
Crowding out arises in many economic contexts, from the macro concern that deficit spending might crowd out investment to
the micro concern that increased employment of women might result in fewer jobs for men. Here I ask whether subsidized
housing crowds out unsubsidized housing in the United States, applying the econometric tools of cointegration analysis. Such
crowding out proves to require stringent restrictions on the coefficients of the cointegrating relationships that link housing stocks
with one another and with other economic variables. These restrictions also apply to testing for other crowding out
phenomena. I find that public housing has steadily added to the total stock of housing since its inception in 1935. In contrast, I
find that moderate income, conventionally financed, subsidized housing, such as the Section 235 and 236 programs that
accounted for more than 1.5 million new units between 1960 and 1987, most likely adds little or nothing to the total housing
stock. These findings speak against recent proposals to provide subsidies to developers who build dwellings for moderate
income Americans, but offer qualified encouragement to those who advocate expansion of the conventional public housing
program.
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