Misalignments in house prices and economic growth in Europe
| Autor: | Juan Carlos Cuestas, Merike Kukk, Natalia Levenko |
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| Rok vydání: | 2022 |
| Předmět: | |
| Zdroj: | Repositori Universitat Jaume I Universitat Jaume I |
| ISSN: | 0003-6846 |
| Popis: | This is an original manuscript of an article published by Taylor & Francis in Applied Economics on 01 Sep 2022, available at: https://doi.org/10.1080/00036846.2022.2110212 In this paper we investigate house price misalignments and how they affect the real economy. We estimate the long-term relationship between house prices and the fundamentals that determine long-term house prices for a panel of European countries with dynamic OLS, using data from 2005–2018. We find that income has been the main driver of fundamental house prices in all countries, while the supply of dwellings has calmed the rise in house prices in some of them. We calculate house price misalignments, which are deviations of house prices from the fundamental value, and we employ them in the growth model. The results of the growth regression indicate that house price imbalances amplify business cycles in the short term, but in the long term house price overvaluations slow economic growth down. The findings imply that it is crucial to take measures to stabilize housing cycles. The authors would like to thank two anonymous reviewers and the editor for very valuable comments. Simon Stehle provided useful feedback on an earlier version of the paper. The paper has been presented at the Bank of Estonia, the 2020 conference of the Estonian Economic Association, and the 13th ReCapNet conference, Stockholm. Juan Carlos Cuestas gratefully acknowledges the Generalitat Valencia project AICO2021/005.The views expressed are those of the authors and not necessarily those of the Bank of Estonia or the Eurosystem. |
| Databáze: | OpenAIRE |
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