The Collateral Channel within and between countries

Jerome Hericourt, Jean Imbs and Lise Patureau

No 19566, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We examine the response of investment to real estate prices among French firms from 1994 to 2015. Using newly introduced methods and specifications, we find that investment sensitivity to real estate prices decreases with firm size: The smallest firms are at least three times more responsive to changes in collateral value compared to the largest firms. We impute these estimates onto other countries where available data lack firm-level detail. This approach allows us to assess the aggregate sensitivity of investment to real estate prices across different countries. Our results indicate significant variation in the sensitivity of aggregate investment to real estate shocks, driven by cross-country differences in the size distribution of firms.

JEL-codes: D31 E25 E44 G01 (search for similar items in EconPapers)
Date: 2024-10
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