This paper studies the relationship between real interest rates and housing using a microeconomic approach. The primary impact of interest rates is on the demand side. The partial equilibrium, comparative static model of demand behavior presented is based on intertemporal preference maximization subject to a multiperiod income constraint. The model is always in terms of real prices and interest rates and operates in discrete time. Consumer preferences are represente by a smooth utility function which depends on two kinds of goods, housing and other nondurables. This study is couched in a neoclassical framework with all markets assumed perfect unless otherwise specified. With this approach the theory of housing and interest rates becomes part of standard consumer theory, rather than being based on inappropriate present value considerations.

In this paper we specify a model in which Congressmen, constituents, and campaign contributors simultaneously decide on behavior. Constituents and contributors desire to influence the voting behavior of Congressmen; Congressmen, on the other hand, want to be elected and vote accordingly. We empirically test this model using roll call voting on eight bills dealing with economic regulation and find support for the model. Our results indicate that part of the voting behavior of Congressmen may be explained by noneconomic factors. We also find that unions and businesses as campaign contributors are sometimes influential; unions are more often influential than is business. Ideological factors are also important in explaining voting.