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Capital Spillover, House Prices, and Consumer Spending: Quasi-Experimental Evidence from House Purchase Restrictions

Author

Listed:
  • Yinglu Deng
  • Li Liao
  • Jiaheng Yu
  • Yu Zhang

Abstract

We use a unique quasi-experiment–spillovers from the imposition of purchase restrictions on local housing to nearby unregulated cities–to study the effects of out-of-town housing demand on house prices and consumer spending. While these restrictions effectively stymied the surge in local house prices, they induced capital flight and sharp abnormal increases in house prices in nearby unregulated cities. The effect of the house price increases on consumer spending is positive in the aggregate, but echoing Favilukis and Van Nieuwerburgh (2021), is redistributive, that is, negative for renters and positive for homeowners.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online

Suggested Citation

  • Yinglu Deng & Li Liao & Jiaheng Yu & Yu Zhang, 2022. "Capital Spillover, House Prices, and Consumer Spending: Quasi-Experimental Evidence from House Purchase Restrictions," The Review of Financial Studies, Society for Financial Studies, vol. 35(6), pages 3060-3099.
    • Handle: RePEc:oup:rfinst:v:35:y:2022:i:6:p:3060-3099.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhab091
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    Citations

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    Cited by:

    1. Felix Chopra & Christopher Roth & Johannes Wohlfart, 2023. "Home Price Expectations and Spending: Evidence from a Field Experiment," CEBI working paper series 23-03, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    2. Yu, Qing & Hui, Eddie Chi-Man & Shen, Jianfu, 2023. "Do local governments capitalise on the spillover effect in the housing market? Quasi-experimental evidence from house purchase restrictions in China," Land Use Policy, Elsevier, vol. 133(C).
    3. Chung Yim Yiu, 2023. "A Natural Quasi-Experiment of the Monetary Policy Shocks on the Housing Markets of New Zealand during COVID-19," JRFM, MDPI, vol. 16(2), pages 1-16, January.

    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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