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Does all firms’ productive investment benefit from real estate price increases?

Denis Fougere (), Remy Lecat () and Simon Ray

Rue de la Banque, 2018, issue 69

Abstract: An increase in real estate prices both raises the value of pledgeable assets and lowers the return on investment due to the increase in the cost of inputs. These two channels draw productive investment in opposite directions. Using a large French database, this Rue de la Banque shows that prices have heterogeneous effects on productive investment depending on the firms’ real estate holdings. Older, less productive firms benefit most from increases in real estate prices.

Date: 2018
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