House Valuations and Economic Growth: Some International Evidence

Joshua Aizenman, Yothin Jinjarak, Huanhuan Zheng

NBER Working Paper No. 22699
Issued in September 2016
NBER Program(s):International Finance and Macroeconomics

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.

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Document Object Identifier (DOI): 10.3386/w22699

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