 House prices, collateral effects and sectoral output dynamics in emerging market economiesBerrak Bahadir and Inci Gumus Journal of International Money and Finance, 2022, vol. 129, issue C Abstract: This paper studies the effect of house prices on sectoral output in emerging market economies, focusing on the role of collateral and borrowing dynamics. Using data from Brazil, we first show that an increase in house prices contributes to higher growth in nontradable sector output, whereas it has no effect on tradable sector output. Then, we study the model dynamics generated by shocks to housing demand in a two-sector small open economy real business cycle model. The results show that housing demand shocks lead to a sectoral reallocation by inducing an expansion in the nontradable sector and a contraction in the tradable sector. The model successfully generates the comovement we observe in the data, matching the strong positive correlation of house prices and nontradable output. We also study the importance of collateral effects for the model dynamics and show that the collateral channel is key to generating the relationship between house prices and sectoral output observed in the data. Keywords: House Prices; Collateral Effects; Housing Demand Shocks; Sectoral Output (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:jimfin:v:129:y:2022:i:c:s0261560622001279 DOI: 10.1016/j.jimonfin.2022.102724 Access Statistics for this article Journal of International Money and Finance is currently edited by J. R. Lothian More articles in Journal of International Money and Finance from Elsevier |
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