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Exports and Property Prices in France: Are They Connected?

Author

Listed:
  • Balázs Égert

    (OECD)

  • Rafal Kierzenkowski

    (OECD)

Abstract

France has seen a marked deterioration in its export performance in the last 10 years or so. Previous empirical research pointed out that weak export performance was due to i) vigorous domestic demand; ii) lower mark-ups due to head-to-head competition with Germany; iii) low non-price competitiveness of French export goods; iv) offshoring of entire production processes (especially in the automobile sector); and v) difficulties of French manufacturing firms to reach critical size for exporting. This paper adds an additional explanation to this list. We argue that resource reallocation from the exporting to the construction sector triggered by fast rising property prices hindered France to meet world export demand vis-à-vis its products. Our econometric analysis shows that the resource reallocation argument helps explain French export performance between the early 2000s and 2007, unexplained by traditional models. This result is confirmed for a set of OECD countries that experienced a marked decline in their export performance and sustained real-estate boom after 2000. Les exportations et les prix immobiliers en France : Sont-ils connectés ? La France a connu une détérioration marquée de sa performance à l’exportation au cours des dix dernières années. Les travaux empiriques antérieurs ont mis en évidence qu’une faible performance à l’exportation était due à i) une demande intérieure vigoureuse ; ii) des marges plus faibles en raison d’une concurrence directe avec l’Allemagne ; iii) une faible compétitivité hors prix des biens d’exportation français ; iv) le transfert de la totalité du processus de production à l’étranger (en particulier dans le secteur automobile) ; et v) les difficultés des entreprises manufacturières françaises pour atteindre une taille critique à l’exportation. Cet article ajoute une explication supplémentaire à cette liste. Nous soutenons que la réallocation des ressources du secteur exportateur vers le secteur de la construction déclenchée par une hausse rapide des prix immobiliers a empêchée la France de satisfaire la demande d’exportation mondiale adressée à ses produits. Notre analyse économétrique montre que l’argument de réallocation de ressources aide à expliquer la performance à l’exportation française entre le début des années 2000 et 2007, inexpliquée par les modélisations traditionnelles. Ce résultat est confirmé pour plusieurs pays de l’OCDE, qui ont connu un déclin de leur performance à l’exportation et un boom immobilier soutenu après 2000.

Suggested Citation

  • Balázs Égert & Rafal Kierzenkowski, 2010. "Exports and Property Prices in France: Are They Connected?," OECD Economics Department Working Papers 759, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:759-en
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    File URL: http://dx.doi.org/10.1787/5kmh379pv30v-en
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    References listed on IDEAS

    as
    1. Bover, Olympia & Jimeno, Juan F, 2007. "House Prices and Employment Reallocation: International Evidence," CEPR Discussion Papers 6543, C.E.P.R. Discussion Papers.
    2. Nivat, D. & Villetelle, J-P., 2006. "Les mauvaises performances du commerce extérieur de la France sont-elles liées à un problème de demande ?," Bulletin de la Banque de France, Banque de France, issue 146, pages 21-31.
    3. Kremers, Jeroen J M & Ericsson, Neil R & Dolado, Juan J, 1992. "The Power of Cointegration Tests," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 325-348, August.
    4. Osterwald-Lenum, Michael, 1992. "A Note with Quantiles of the Asymptotic Distribution of the Maximum Likelihood Cointegration Rank Test Statistics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 461-472, August.
    5. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
    6. Christophe Blot & Marion Cochard, 2008. "L'énigme des exportations revisitée. Que faut-il retenir des données de panel ?," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(3), pages 67-100.
    7. Marion Cochard, 2008. "Le commerce extérieur français à la dérive ?," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(3), pages 29-66.
    8. Hans-Werner Sinn, 2006. "The Pathological Export Boom and the Bazaar Effect: How to Solve the German Puzzle," The World Economy, Wiley Blackwell, vol. 29(9), pages 1157-1175, September.
    9. Gaulier, G., 2008. "L’essor des importations européennes de biens intermédiaires depuis des pays à bas salaires Des modèles différents d’externalisation au « Sud »," Bulletin de la Banque de France, Banque de France, issue 173, pages 9-16.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Real estate-driven exports
      by ? in VoxEU.org on 2013-10-02 06:00:00

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    Cited by:

    1. Florian Botte & Laurent Cordonnier & Thomas Dallery & Vincent Duwicquet & Jordan Melmies & Franck Van de Velde, 2017. "The cost of capital: between losses and diversion of wealth
      [Le coût du capital : entre pertes et détournement de richesses]
      ," Working Papers hal-01711157, HAL.
    2. Sofronis Clerides, 2014. "The Collapse of the Cypriot Banking System: A Bird’s Eye View," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 8(2), pages 3-35, December.
    3. Anupam Nanda & Jia-Huey Yeh, 2016. "International Transmission Mechanisms and Contagion in Housing Markets," The World Economy, Wiley Blackwell, vol. 39(7), pages 1005-1024, July.
    4. Marina Tkalec & Maruska Vizek, 2014. "Real estate boom and export performance bust in Croatia," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics, vol. 32(1), pages 11-34.

    More about this item

    Keywords

    allocation des ressources; competitiveness; compétitivité; construction; construction; export performance; exportations; exports; France; France; house prices; OCDE; OECD; performance à l'exportation; prix immobiliers; resource allocation;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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