ECONOMETRIC MODELLING OF HOUSING INVESTMENT IN FINLAND

This study estimates a Tobin's q model of housing investment for Finland using quarterly time series data for 1971(1)-1996(3). The econometric analysis is based on Johansen's multivariate cointegration method. The empirical resuts indicate the existence of two uniquely identified cointegrating vectors, defining a Tobin's q equilibrium relation and a long-run housing investment equilibrium relation. The empirical econometric model imposes long-run homogeneity of housing investment with respect to house prices and building costs.