The war in Iran has led to an increase in oil prices, which…
The war in Iran has led to an increase in oil prices, which raises the cost of producing and transporting materials needed for construction. Through the lens of the Smith model, such an oil price increase would constitute an upwards shift in the construction cost curve. Applying the sticky price Smith model: What would be the effect of the increase in oil prices on apartment rents, occupancy, and values over the long run (10 years or more) assuming that the price increase is permanent and that no other policies were changed.