Dynamism Diminished: The Role of Housing Markets and Credit Conditions

Steven Davis and John Haltiwanger

No 25466, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We estimate the effects of house price changes on young-firm employment shares and industry- level employment growth in local economies. A novel test shows that house price effects on local economies work through wealth, liquidity and collateral effects on the propensity to start new firms and expand young ones. Aggregating local effects to the national level, our estimates imply that housing market ups and downs play a major role – as transmission channel and driving force – in medium-run fluctuations in young-firm employment shares in recent decades. We also find a distinct and smaller role for locally exogenous loan-supply shifts.

JEL-codes: E2 E3 E5 G2 J2 (search for similar items in EconPapers)
Date: 2019-01
New Economics Papers: this item is included in nep-ban, nep-lma, nep-mac and nep-ure
Note: EFG LS ME
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Citations: View citations in EconPapers (37)

Published as Steven J. Davis & John Haltiwanger, 2024. "Dynamism Diminished: The Role of Housing Markets and Credit Conditions," American Economic Journal: Macroeconomics, vol 16(2), pages 29-61.

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Journal Article: Dynamism Diminished: The Role of Housing Markets and Credit Conditions (2024)
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