An Analysis of the Jonsei and Purchase Prices in the Korean Housing Market ()
Abstract
The primary purpose of this paper is to construct and estimate an
econometric model for the Jonsei-to-Purchase price ratio (JPR), and to draw
implications for the development in the Korean housing market. In particular,
we are interested in: a) identifying regimes across which the ratio shows
markedly different dynamic behavior; and b) drawing implications from the model
for the recent increases in the ratio. Estimation of the model for the period
1987:Q1-2011:Q3 confirms the presence of two different regimes: one with the
zero trend in the JPR, and the other with positive trend. Furthermore, it is
found that cyclical variations play nontrivial role only in the first regime,
while the movements of the JPR in the other regime are mostly governed by the
trend component. We also find that the cyclical deviations of the ratio from
its trend are corrected, if any, by the changes in the future purchase price.
Share and Cite:
Lim, G. (2015) An Analysis of the Jonsei and Purchase Prices in the Korean Housing Market.
Modern Economy,
6, 81-89. doi:
10.4236/me.2015.61007.
Conflicts of Interest
The authors declare no conflicts of interest.
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