1. MODULE 15

2. Figure I: A Schematic View of the Housing Market HOUSEHOLDS Consumer Tastes and Demographic Variables Tax System Real Wealth and Income Relative Prices Mortgage Financing Terms Tax Treatment PUBLIC SECTOR: Housing Policy Monetary Policy Fiscal Policy Tax Policy Economic Environment Inflationary Expectations Vacancies Housing Services Prices and Rental Rates PRODUCTION DECISIONS: Balancing Risk and Return Expected Construction Costs and Operating Expense Earnings of Factors of Production, including Materials, labor, and land STOCK DEMAND FOR HOUSING Real User Costs Stock Supply of Housing Conversions, Demolitions, and Removal Construction Activity: New Units, Additions, and Alterations Non-Residential Real Estate Activity PRIVATE FINANCIAL INSTITUTIONS: Portfolio Size and Composition of Portfolio Growth of Portfolios Relative Ratios of Return in General Capital Market

3. LONG TERM GNP TREND VERSUS CYCLE BEHAVIOR REAL GNP ACTUAL GNP MOVEMNTS TREND LINE TIME

4. TYPICAL GNP CYCLE (DE-TRENDED DATA): GNP REFERENCE CYCLE REAL GNP TREND LINE TIME TROUGH PHASE IIIPHASE IIPHASE I PEAK Phase I is the Upturn (Recovery) Period. Phase II is the Steady Growth Period. Phase III is the Downturn (Recession Period).

5. CYCLICAL PATTERNS OF THE COMPONENTS OF FIXED INVESTMENT

6. A RESIDUAL USER HYPOTHESIS: CREDIT CONSTRAINT CREDIT GNP REFERENCE CYCLE TOTAL AVAILABLE CREDIT CREDIT D FOR Ip TIME

7. GNP REFERENCE CYCLE TOTAL AVAILABLE CREDIT DIp TIME CREDIT DCd DCd = Demand for Credit for Consumer Durables DIp = Demand for Credit for Investment in “Plants”

8. EXCEL GRAPH (III-90)

9. RELATIONSHIP BETWEEN FIXED (NON-RESIDENTIAL) INVESTMENT AND GNP