House Valuations and Economic Growth: Some International Evidence

27 Pages Posted: 3 Oct 2016

See all articles by Joshua Aizenman

Joshua Aizenman

University of Southern California - Department of Economics; National Bureau of Economic Research (NBER)

Yothin Jinjarak

Victoria University of Wellington - School of Economics & Finance

Huanhuan Zheng

National University of Singapore

Date Written: September 2016

Abstract

This paper evaluates the relation between house prices and economic growth. Using a dataset that covers house prices for 19 countries from the first quarter of 1975 to the third quarter of 2013. We find that house price appreciations are positively associated with economic growth, while the relation between house price depreciations and economic growth is highly non-linear, depending on country-specific characteristics. In the absence of concurrent banking crisis, large house price depreciations (rather than prolonged and modest ones) are positively associated with economic growth. We also find that the positive association between house price depreciations and economic growth is more pronounced in countries with civil-law legal systems, in countries without mortgage insurance or personal bankruptcy law.

Suggested Citation

Aizenman, Joshua and Jinjarak, Yothin and Zheng, Huanhuan, House Valuations and Economic Growth: Some International Evidence (September 2016). NBER Working Paper No. w22699. Available at SSRN: https://ssrn.com/abstract=2846935

Joshua Aizenman (Contact Author)

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall, 300
Los Angeles, CA 90089
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Yothin Jinjarak

Victoria University of Wellington - School of Economics & Finance ( email )

P.O. Box 600
Wellington 6001
New Zealand

Huanhuan Zheng

National University of Singapore ( email )

Bukit Timah Road 469 G
Singapore, 117591
Singapore

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