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Space matters: Understanding the real effects of macroeconomic variations in cross-country housing price movements

Kun Duan, Tapas Mishra () and Mamata Parhi

Economics Letters, 2018, vol. 163, issue C, 130-135

Abstract: Changes in macroeconomic conditions can significantly determine directions and magnitudes of cross-country housing price movements. We demonstrate that such effects are consistently over-estimated when ‘spatial frictions’ are merely assumed, but are not explicitly modeled in the empirical framework. The extent of over-estimation bias has significant policy implications.

Keywords: Macroeconomic adjustments; Spatial frictions; International housing market; Estimation bias; Spatial panel data (search for similar items in EconPapers)
JEL-codes: C32 E60 E62 R31 (search for similar items in EconPapers)
Date: 2018
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