Exports and Property Prices in France: Are They Connected?

29 Pages Posted: 27 Jul 2010

See all articles by Balázs Égert

Balázs Égert

Organization for Economic Co-Operation and Development (OECD); CESifo (Center for Economic Studies and Ifo Institute); Université Paris X Nanterre - Department of Economics; William Davidson Institute

Rafaƚ Kierzenkowski

Université Paris IX Dauphine

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Date Written: May 1, 2010

Abstract

France has seen a marked deterioration in its export performance in the last 10 years or so. Previous empirical research pointed out that weak export performance was due to i) vigorous domestic demand; ii) lower mark-ups due to head-to-head competition with Germany; iii) low non-price competitiveness of French export goods; iv) offshoring of entire production processes (especially in the automobile sector); and v) difficulties of French manufacturing firms to reach critical size for exporting. This paper adds an additional explanation to this list. We argue that resource reallocation from the exporting to the construction sector triggered by fast rising property prices hindered France to meet world export demand vis-à-vis its products. Our econometric analysis shows that the resource reallocation argument helps explain French export performance between the early 2000s and 2007, unexplained by traditional models. This result is confirmed for a set of OECD countries that experienced a marked decline in their export performance and sustained real-estate boom after 2000.

Keywords: OECD, France, Competitiveness, exports, export performance, construction

JEL Classification: F10, F14, O14, O52

Suggested Citation

Egert, Balazs and Kierzenkowski, Rafaƚ, Exports and Property Prices in France: Are They Connected? (May 1, 2010). William Davidson Institute Working Paper No. 985, Available at SSRN: https://ssrn.com/abstract=1649667 or http://dx.doi.org/10.2139/ssrn.1649667

Balazs Egert (Contact Author)

Organization for Economic Co-Operation and Development (OECD) ( email )

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CESifo (Center for Economic Studies and Ifo Institute)

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Université Paris X Nanterre - Department of Economics

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William Davidson Institute

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Rafaƚ Kierzenkowski

Université Paris IX Dauphine ( email )

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