Effects of Real Estate Industry of U.S. Fiscal Policy

This research examines the effects on the real estate industry of monetary and fiscal policy in the United States (US). For purposes of this research, a broad definition of the real estate industry is employed. This definition covers real estate property sales to end users (homeowners, industrial firms, and so forth), construction (particularly homebuilding), and real estate investment.

MONETARY POLICY AFFECTING REAL ESTATE

Keynes held that the rate of interest is determined by the interesection of the supply schedule of money and the demand schedule for money.1 Keynesian economic theory, with respect to interest, thus, is, essentially, a monetary theory.2 The Keynesian liquidity preference schedule includes both the transactions demand and the assets demand for money.3

The loanable funds theory provides a set of savings schedules which are related to a variety of income levels.

1R. A. Mundell, Monetary Theory (Santa Monica, Califor nia: Goodyear Publishing Company, Inc., 1971), 2326.

2M. Kalecki, The Economic Dynamic (London: Allen & Unwin Publishers, 1954), 140

2J. J. Klein, Economic Theory of Interest (New York: McGrawHill Book Company, 1982), 44.

Keynesian theory provides a family of investmentdemand schedules which are also related to a variety of income levels. Taken together, these two sets of schedules may be used to derive the investmentsavings (IS) curve, which, in turn, describes the functio

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Category: Economics - E