Housing booms, reallocation and productivity
No 904, BIS Working Papers from Bank for International Settlements
I establish that US public firms holding real estate have persistently lower levels of productivity than non-holders. Rising real estate values relax collateral constraints for companies that own real estate and allow them to expand production. Consequently, an increase in house prices reallocates capital and labor towards inefficient firms, with negative consequences for aggregate industry productivity. Industries with a stronger relative increase in real estate values see a significant decline in total factor productivity, and the within-industry covariance between firm size and productivity declines. My results suggest a novel channel through which real estate booms affect productivity and have implications for monetary policy.
Keywords: housing boom; collateral; misallocation; productivity; low interest rates (search for similar items in EconPapers)
JEL-codes: D22 D24 O16 O47 R3 (search for similar items in EconPapers)
Pages: 24 pages
New Economics Papers: this item is included in nep-eff, nep-fdg and nep-ure
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Working Paper: Collateral, Reallocation, and Aggregate Productivity: Evidence from the U.S. Housing Boom (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:904
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