Housing deep-habit model: Mutual implications of macroeconomics and asset pricing

The paper develops a housing deep-habit model to explore linkages between macroeconomic decisions and asset pricing of nondurable and housing goods. Owing to heterogeneous characteristics of housing assets, the model sheds insights into the counter-cyclical property of housing markups.

► The paper develops a housing deep-habit model with nondurable and housing goods. ► It allows cross-sector interactions on both supply and demand sides. ► The model sheds insights into the counter-cyclical property of housing markups.