MSA-level estimates of a housing supply schedule must offer a solution to the twin problems
of simultaneity and stationarity that plague the time series data for local housing prices and
stock. An Error Correction Model (ECM) is shown to provide a solution to stationarity, but not
simultaneity. A Vector Error Correction Model (VECM) is suggested to handle both the
stationarity and endogeneity problems. Such models also nicely distinguish between (very)
long run elasticities and a variety of short term impacts. We estimate these models …