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- Title
Does Political Uncertainty Affect Residential Development?
- Authors
Luo, Shikong; Tidwell, Alan; Clements, Sherwood
- Abstract
This study examines the link between policy uncertainty and residential construction activities in the United States. Using a newly developed measure of political uncertainty, we find quarterly flow of state-level building permits to be negatively associated with aggregate political uncertainty. The negative impact of political uncertainty is more pronounced in states where the debt-to-income ratio or local economic variability is high. We also use gubernatorial elections as a plausible exogenous variation in political uncertainty. Compared to states without an upcoming gubernatorial election, we document a sharp decline in residential construction for states in the pre-election quarter when the state-specific political uncertainty is particularly high. These results suggest a non-negligible role of political uncertainty in residential construction activity.
- Subjects
UNITED States; HOUSING development; GUBERNATORIAL elections; HOUSE construction
- Publication
Journal of Real Estate Finance & Economics, 2022, Vol 65, Issue 4, p572
- ISSN
0895-5638
- Publication type
Article
- DOI
10.1007/s11146-021-09867-9