Somewhat surprisingly, estimates from this conventional approach suggest that, at current interest rates, the existing stocks of houses and consumer durables are appreciably below the sustainable levels. In this model, low interest rates have a powerful effect on the desired stocks of housing and durables.
Even when we estimate sustainable levels based on historical average interest rates, we conclude by this method that current housing and durables stocks are about 4 in line with long-run demand. We need to keep in mind that these are only very rough estimates of unobservable variables.