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Energy Inflation and House Price Corrections

  • Andreas Breitenfellner
  • Jesús Crespo Cuaresma
  • Philipp Mayer

Using a dataset for 18 OECD economies spanning the last four decades, we identify periods of downward house price adjustment and estimate conditional logit models to measure the effect of energy inflation on the probability of these house price corrections after controlling for other relevant macroeconomic variables. Our results give strong evidence that increases in energy price inflation raise the probability of such corrective periods taking place. We discuss various channels that could explain this phenomenon as well as the implication of our results to the analysis of macro-financial risks.

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Paper provided by Directorate General Economic and Financial Affairs (DG ECFIN), European Commission in its series European Economy - Economic Papers with number 471.

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Length: 26 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:euf:ecopap:0471
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