Deposit deregulation and the sensitivity of housing

This study assesses whether regulatory actions account for major changes in estimates of important housing coefficients since the late 1970s. Results imply that the bulk of these changes owe to the end of Reg Q and that Reg Q measures need to account for the introduction of deposit instruments in the late 1970s. Findings imply that models of the aggregate housing stock are unlikely to yield coefficients that are stable enough for practical use unless they accurately control for regulatory changes. Ln this regard, accounting for small saver or money market certificates yields significant improvements over a naive Reg Q measure. (C) 1996 Academic Press, Inc.