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Do house prices impact business starts?

Lakshmi Balasubramanyan () and N. Edward Coulson ()

Journal of Housing Economics, 2013, vol. 22, issue 1, 36-44

Abstract: At the national level, business starts and housing prices both fell dramatically over the 2007–2009 period. Using a proprietary database of business starts this paper quantitatively models the interaction between house price and business starts from 2005 to 2009. We identify the impact by exploiting the cross-sectional variation in house price changes during the period. Controlling for observable and unobservable city characteristics, we find the significance of a robust relationship between house prices and business starts depends on the size of the business starts; a robust link exists between house prices and very small business, whereas, no significant robust link is seen for large business starts.

Keywords: House prices; Business starts; Collateral channel (search for similar items in EconPapers)
JEL-codes: R1 R51 G01 G32 (search for similar items in EconPapers)
Date: 2013
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Handle: RePEc:eee:jhouse:v:22:y:2013:i:1:p:36-44