Housing investment in Spain: has it been the main engine of growth?

Abstract

This article studies dynamic responses of employment and Gross Domestic Product (GDP) growth to a permanent, unitary shock in the housing capital stock for the Spanish economy. It quantifies the importance of this variable in the boom experienced by the Spanish economy during the pre-crisis years. Results confirm that building industry has been the most important engine for output and labour growth.

Keywords:

• housing capital stock
• output
• labour
• growth

JEL Classification::

• C32
• H54
• C51
• C53
• E22

Acknowledgements

We are grateful to anonymous referee and the editor Mark Taylor for their useful comments. We are responsible for all the remaining errors.

Notes

¹ The roots of the determinant of must lie on or outside the unit circle.

² All mathematical details are given in the Appendix.

³ Ceuta and Melilla employment is not computed to avoid missing data in the first period of time.

⁴ Diagnosis of the process is shown in Appendix III.