Land Collateral and Labor Market Dynamics in France

Leo Kaas, Patrick Pintus and Simon Ray (simon.ray@banque-france.fr)
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Simon Ray: Aix-Marseille School of Economics, University of Marseille, France

No 2014-18, Working Paper Series of the Department of Economics, University of Konstanz from Department of Economics, University of Konstanz

Abstract: The value of land in the balance sheet of French firms correlates positively with their hiring and investment flows. To explore the relationship between these variables, we develop a macroeconomic model with firms that are subject to both credit and labor market frictions. The value of collateral is driven by the forward-looking dynamics of the land price, which reacts endogenously to fundamental and non-fundamental (sunspot) shocks. We calibrate the model to French data and find that land price shocks give rise to significant amplification and hump-shaped responses of investment, vacancies and unemployment that are in line with the data.

Keywords: Financial shocks; Labor market frictions (search for similar items in EconPapers)
JEL-codes: E24 E32 E44 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2014-09-09
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Land collateral and labor market dynamics in France (2016)
Working Paper: Land collateral and labor market dynamics in France (2016)
Working Paper: Land Collateral and Labor Market Dynamics in France (2014)
Working Paper: Land Collateral and Labor Market Dynamics in France (2014)
Working Paper: Land Collateral and Labor Market Dynamics in France (2014)
Working Paper: Land Collateral and Labor Market Dynamics in France (2014)
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