House Prices and Economic Growth in South Africa: Evidence from Provincial-Level Data

Beatrice Desiree Simo-Kengne (), Manoel Bittencourt () and Rangan Gupta

No 201116, Working Papers from University of Pretoria, Department of Economics

Abstract: This paper empirically examines the effect of house price changes on economic growth across provinces in South Africa. The economic impact of house prices is estimated using a panel data set that covers all nine provinces in South Africa from 1996 to 2010. We find that when heterogeneity, endogeneity and spatial dependence are controlled for, house price changes exhibit a significant effect on regional economic growth in South Africa. The paper then introduces a Seemingly Unrelated Regression (SUR) specification and shows that spatial effects are highly important in South African housing markets. Moreover, the estimation results suggest that the wealth effect is important at the aggregated level which contrasts the relevance of the collateral effect found at the regional level.

Keywords: House prices; Economic growth; Spatial dependence; Panel data (search for similar items in EconPapers)
JEL-codes: C33 E23 E24 R11 R12 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2011-08
New Economics Papers: this item is included in nep-afr, nep-fdg, nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Journal Article: House Prices and Economic Growth in South Africa: Evidence From Provincial-Level Data (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:201116

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