 (Un)expected housing price changes: Identifying the drivers of small business financePavel Kapinos, Tami Gurley-Calvez and Kandice Kapinos Journal of Economics and Business, 2016, vol. 84, issue C, 79-94 Abstract: In this paper, we use the Kauffman Firm Survey to examine the effect of housing price changes on small business financial variables. We apply macroeconomic forecasting techniques to decompose housing price changes into expected and unexpected components. In addition to investigating the effect of predictable and unpredictable movements in housing prices, we argue that our use of forecast errors allows us to identify plausibly exogenous variation in housing prices. We show that for several measures of small business financing, the unexpected housing price changes have particularly large effects on small business balance sheets. Analysis of specific measures of credit access points to the channels of transmission of housing market disruptions on small business outcomes and suggests that small business owners absorb negative shocks to housing wealth through relatively expensive sources of credit and not through loans from the banking sector. We conclude with policy proposals for reducing the effect of housing market disruptions on small businesses. Keywords: D14; G17; Small business finance; House price changes; Forecasting (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jebusi:v:84:y:2016:i:c:p:79-94 DOI: 10.1016/j.jeconbus.2016.02.002 Access Statistics for this article Journal of Economics and Business is currently edited by Emanuele Bajo and Moritz Ritter More articles in Journal of Economics and Business from Elsevier |
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