Let's just do some basic napkin math. Let's say that if housing supply were less constrained, 5% of Americans would move to a location where they would make 5% more. 5% * 5% = 0.25%. So it is not totally out of the realm of possibility that less constrained housing markets would increase GDP by 0.25%. And yet the critique confidently reports a 0.02% change in GDP. Seems like the critique is off in in the confidence in its result by... an order of magnitude? Keep in mind too that the initial paper was talking about an impact on GDP over time where the growth effects from a more optimal policy compound over time.
Look, my recollection is that I had a hard time reading through the original paper and don't really understand how they identify their general equilibrium model in data and why they think it's plausibly identified, but the napkin math prior here is that confidently asserting that constraints on housing only impact GDP by 0.02% is absurd.
Let's just do some basic napkin math. Let's say that if housing supply were less constrained, 5% of Americans would move to a location where they would make 5% more. 5% * 5% = 0.25%. So it is not totally out of the realm of possibility that less constrained housing markets would increase GDP by 0.25%. And yet the critique confidently reports a 0.02% change in GDP. Seems like the critique is off in in the confidence in its result by... an order of magnitude? Keep in mind too that the initial paper was talking about an impact on GDP over time where the growth effects from a more optimal policy compound over time.
Look, my recollection is that I had a hard time reading through the original paper and don't really understand how they identify their general equilibrium model in data and why they think it's plausibly identified, but the napkin math prior here is that confidently asserting that constraints on housing only impact GDP by 0.02% is absurd.