Plot the percentage change in the relative price of housing, along with the percentage change in real
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Plot the percentage change in the relative price of housing, along with the percentage change in real consumption of nondurables and services. Calculate the relative price of housing as the Case and Shiller 20-city home price index divided by the consumer price index. What do you see in the plot? Does the value of housing appear to matter for consumption behavior? If so, why should it? If not, why not?
Answer this question using the Federal Reserve Bank of St. Louis’s FRED database, accessible at http://research.stlouisfed.org/fred2/
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