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The impacts of fiscal policy shocks on the US housing market

Listed author(s):
  • Isabel Ruiz

    ()

    (University of Oxford)

  • Carlos Vargas-Silva

    ()

    (University of Oxford)

Abstract We explore empirically the impact of fiscal policy shocks on the US housing market using a vector autoregressive model. Identification is achieved through sign restrictions. Accounting for announcement effects, a revenue shock has a short-lived positive impact on house prices and indicators of housing activity. The impact of a spending shock on housing activity is negative and more persistent, but there is no substantial response from house prices. A balanced budget spending expansion (i.e. 1 % increases in spending and revenue) has a short-lived negative impact on housing activity and a very persistent negative impact on house prices. The paper presents results from other combinations of the two shocks. Results are generally robust to only using data for the post-financial liberalization period (i.e. since 1983).

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File URL: http://link.springer.com/10.1007/s00181-015-0961-8
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Article provided by Springer in its journal Empirical Economics.

Volume (Year): 50 (2016)
Issue (Month): 3 (May)
Pages: 777-800

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Handle: RePEc:spr:empeco:v:50:y:2016:i:3:d:10.1007_s00181-015-0961-8
DOI: 10.1007/s00181-015-0961-8
Contact details of provider: Web page: http://www.springer.com

Order Information: Web: http://www.springer.com/economics/econometrics/journal/181/PS2

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  22. repec:taf:applec:44:y:2012:i:34:p:4439-4454 is not listed on IDEAS
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