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The Collateral Channel: How Real Estate Shocks Affect Corporate Investment:Comment

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Abstract

Chaney, Sraer and Thesmar (2012) find that over the 1993–2007 period, a $1 increase in collateral (the value of real estate a firm actually owns) leads the representative US public corporation to raise its investment by $0.06. We first demonstrate that data Winsorization induces a strong bias in favour of finding this result. There is no relationship ($0.00 per $1) between the value of real estate a firm owns and its investment in the unaltered data. We also show that the identification approach based on local variations in real estate prices does not provide evidence on the collateral channel.

Suggested Citation

  • Timothy Grieder & Hashmat Khan, 2017. "The Collateral Channel: How Real Estate Shocks Affect Corporate Investment:Comment," Carleton Economic Papers 17-03, Carleton University, Department of Economics.
    • Handle: RePEc:car:carecp:17-03
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    1. Thomas Chaney & David Sraer & David Thesmar, 2012. "The Collateral Channel: How Real Estate Shocks Affect Corporate Investment," American Economic Review, American Economic Association, vol. 102(6), pages 2381-2409, October.
    2. Albert Saiz, 2010. "The Geographic Determinants of Housing Supply," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 125(3), pages 1253-1296.
    3. Christopher R. Bollinger & Amitabh Chandra, 2005. "Iatrogenic Specification Error: A Cautionary Tale of Cleaning Data," Journal of Labor Economics, University of Chicago Press, vol. 23(2), pages 235-258, April.
    4. Hatice Ozer Balli & Bent Sørensen, 2013. "Interaction effects in econometrics," Empirical Economics, Springer, vol. 45(1), pages 583-603, August.
    5. repec:hal:spmain:info:hdl:2441/75koqefued8i7pihbrl9u84p4u is not listed on IDEAS
    6. repec:spo:wpmain:info:hdl:2441/75koqefued8i7pihbrl9u84p4u is not listed on IDEAS
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    More about this item

    Keywords

    Collateral; Real Estate Prices; Corporate Investment; Winsorization; Aggregate Shocks;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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