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House Prices and Economic Growth in South Africa: Evidence from Provincial-Level Data

Listed author(s):
  • Beatrice D. Simo-Kengne

    ()

    (Department of Economics, University of Pretoria)

  • Manoel Bittencourt

    ()

    (Department of Economics, University of Pretoria)

  • Rangan Gupta

    ()

    (Department of Economics, University of Pretoria)

This paper empirically examines the effect of house price changes on economic growth across provinces in South Africa. The economic impact of house prices is estimated using a panel data set that covers all nine provinces in South Africa from 1996 to 2010. We find that when heterogeneity, endogeneity and spatial dependence are controlled for, house price changes exhibit a significant effect on regional economic growth in South Africa. The paper then introduces a Seemingly Unrelated Regression (SUR) specification and shows that spatial effects are highly important in South African housing markets. Moreover, the estimation results suggest that the wealth effect is important at the aggregated level which contrasts the relevance of the collateral effect found at the regional level.

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Paper provided by University of Pretoria, Department of Economics in its series Working Papers with number 201116.

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Length: 22 pages
Date of creation: Aug 2011
Handle: RePEc:pre:wpaper:201116
Contact details of provider: Postal:
PRETORIA, 0002

Phone: (+2712) 420 2413
Fax: (+2712) 362-5207
Web page: http://www.up.ac.za/economics

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