Essays in housing

This dissertation studies the importance of housing in consumption and investment.;The first chapter introduces the general topics.;The second chapter studies the importance of the house on consumption and investment in a simplified continuous-time setting with the Constant Elasticity of Substitution (CES) utility function of indivisible durable goods (house) and perishable goods. Explicit solutions for the optimal consumption and investment decisions are provided when there is an adjustment cost on the house (durable goods). Numerical simulations are used to show the impacts of the adjustment cost.;The third chapter explores the macroeconomics implications of housing. We model housing consumption in the category of consumption that needs to be committed to a predetermined consumption level for multiple periods. To change the consumption level, one has to wait until the commitment is lifted or pay an adjustment cost. We test this model and estimate the preference parameters for the CES utility function. The special case values that correspond to the separable utility function, Cobb-Douglas utility function and additive utility function are rejected in tests. Thus the modeling of the CES utility function is needed.