Current account patterns and national real estate markets

Arbeitspapier

This paper studies the association between the current account and real estate valuation across countries, subject to data availability [43 countries, of which 25 are OECD], during 1990 - 2005. We find robust and strong positive association between current account deficits and the appreciation of the real estate prices/(GDP deflator). Controlling for lagged GDP/capita growth, inflation, financial depth, institution, urban population growth and the real interest rate; a one standard deviation increase of the lagged current account deficits is associated with a real appreciation of the real estate prices by 10%. This real appreciation is magnified by financial depth, and mitigated by the quality of institutions. Intriguingly, the economic importance of current account variations in accounting for the real estate valuation exceeds that of the other variables, including the real interest rate and inflation. Among the OECD countries, we find evidence of a decline overtime in the cross country variation of the real estate/(GDP deflator), consistent with the growing globalization of national real estate markets. Weaker patterns apply to the non-OECD countries in the aftermath of the East Asian crisis.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 08-16

Classification and Topics

• Classification: Wirtschaft ; Economic Integration ; International Investment; Long-term Capital Movements ; Current Account Adjustment; Short-term Capital Movements ; Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand ; Housing Supply and Markets
• Subject: current account ; real estate ; appreciation ; financial depth ; Zahlungsbilanzungleichgewicht ; Leistungsbilanz ; Immobilienpreis ; Aufwertung ; Zins ; Inflationsrate ; Welt ; OECD-Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Aizenman, Joshua ; Jinjarak, Yothin
• Event: Veröffentlichung
• (who): University of California, Santa Cruz Institute for International Economics (SCIIE)
• (where): Santa Cruz, CA
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/64032
• Last update: 10.03.2025, 11:45 AM CET