ABSTRACT
FigureIResidualsfromthelinearmodelwithacubiclag(46)andfromtheSTHmodel(47) forthefirstdifferencesofthelogarithmicUKhousingpriceindex,1959(I)-1982(2).
priceturbulencein1973.Thelinearequationstrengthenedbythecubiclagdoesnot explainthefeaturesofthehousingpriceboomanditsimmediateaftermathaswellas (47).Apartfromthatperiodbothmodelshavealmostidenticalfits.Ttseemsobvious thatthenonlinearspecificationismainlyrequiredtomodeltheexceptionalincrease inhousepricesin]973.ThisisalsoseenfromFigure2.Itshowsthatthetransition functionobtainsvaluesclosetozeromostofthetime.Abetween andthelinearpartof(47)indicatesthattheyarequitesimilar.Forthose and(1·7)thusmayheexpectedtohaverathersimilarresiduals.
