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On the Link between Oil Price and House Prices in the U.S.: Asymmetric Evidence from State Level Data

Author

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  • Mohsen Bahmani-Oskooee

    (The University of Wisconsin-Milwaukee)

  • Seyed Hesam Ghodsi

    (Model Risk Oversight at Charles Schwab & Co. Inc.)

Abstract

Since oil is used as an input in the production and delivery process, any change in its price can affect almost all sectors of an economy. Researchers have tried to assess the impact of the rising price of oil on domestic production, inflation, investment, the stock market, etc. In order to determine if inflationary effects of rising oil prices have spread to house prices in the U.S., unlike previous research, we investigate the link between oil prices and house prices by using data from each state of the U.S. Furthermore, for the first time, we engage in asymmetry analysis and find short-run asymmetric effects in almost all of the states but short-run cumulative effects or asymmetric impact in 15 states. Although we also find significant long-run asymmetric effects in 26 states, the results reveal that an increase in oil prices has contributed to house price increase in only 11 states and a decrease in oil prices lowered house prices in only three states.

Suggested Citation

  • Mohsen Bahmani-Oskooee & Seyed Hesam Ghodsi, 2020. "On the Link between Oil Price and House Prices in the U.S.: Asymmetric Evidence from State Level Data," International Real Estate Review, Global Social Science Institute, vol. 23(1), pages 65-106.
    • Handle: RePEc:ire:issued:v:23:n:01:2020:p:65-106
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    More about this item

    Keywords

    House Prices; Oil Price; Asymmetry Analysis; The United States.;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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