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Commodity house prices

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  • Charles Ka Yui Leung
  • Song Shi
  • Edward Tang

Abstract

This paper studies how commodity price movements have affected local house prices in commodity-dependent economies, Australia and New Zealand. We build a geographically hierarchical empirical model and find that commodity prices influence local house prices directly and also indirectly through macroeconomic variables. While commodity price changes function more like “income shocks” rather than “cost shocks” in both Australia and New Zealand, regional heterogeneity is also observed in terms of differential dynamic responses of local house prices to energy versus non-energy commodity price movements. The results are robust to alternative approaches. Directions for future research are also discussed.

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Paper provided by Federal Reserve Bank of Dallas in its series Globalization and Monetary Policy Institute Working Paper with number 154.

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Date of creation: 2013
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Handle: RePEc:fip:feddgw:154

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