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House prices and job losses

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  • Pinter, Gabor

Abstract

What explains the strong comovement between house prices and job losses over the UK business cycle? To study this question, I build a general equilibrium model with collateral constraints, endogenous job separation and housing shocks, and confront it with macroeconomic data via Bayesian methods. The results suggest that shocks to house prices (i) explain about 10-20% of output fluctuations and about 20-30% of fluctuations in unemployment and job separation rates via the collateral channel, and (ii) were a major cause in triggering the 1990 and 2008 recessions in the UK.

Suggested Citation

  • Pinter, Gabor, 2015. "House prices and job losses," LSE Research Online Documents on Economics 86318, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:86318
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    File URL: http://eprints.lse.ac.uk/86318/
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    Cited by:

    1. Bahaj, Saleem A. & Foulis, Angus & Pinter, Gabor, 2017. "Home values and firm behaviour," LSE Research Online Documents on Economics 86151, London School of Economics and Political Science, LSE Library.
    2. Kristian Blickle, 2017. "Local Banks, Credit Supply, and House Prices," Working Papers on Finance 1811, University of St. Gallen, School of Finance.
    3. Gabor Pinter & Angus Foulis & Saleem Bahaj, 2016. "The Residential Collateral Channel," 2016 Meeting Papers 502, Society for Economic Dynamics.
    4. repec:aes:amfeco:v:46:y:2017:i:19:p:682 is not listed on IDEAS
    5. Ryan Niladri Banerjee & Kristian S Blickle, 2016. "Housing collateral and small firm activity in Europe," BIS Working Papers 575, Bank for International Settlements.
    6. Garreth Rule, 2015. "Understanding the central bank balance sheet," Handbooks, Centre for Central Banking Studies, Bank of England, edition 1, number 32, March.
    7. Philip Arestis & Ana Rosa Gonzales-Martinez, 2017. "Economic precariousness: A new channel in the housing market cycle," FMM Working Paper 12-2017, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.

    More about this item

    Keywords

    business cycle; house prices; financial frictions; labour market frictions utilisation; endogenous government spending.;

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

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