Pair-Wise Analysis of Intra-City Price Convergence Within the Paris Housing Market

We examine long-run house price convergence across the twenty Paris districts using a quarterly dataset that spans from 1991 to 2014. Our econometric modelling exercise adopts a pair wise approach that is built on a probabilistic test for convergence based on house price differentials. We find that more than 50% of the intra-city house price differentials that can be computed are stationary. Our findings further reveal that the half-life of a shock to long-run price equilibrium is affected positively by unemployment, distance and housing supply.

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