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Manufacturing Decline and House Price Volatility

Author

Listed:
  • Hull, Isaiah

    (Research Department, Central Bank of Sweden)

  • Olovsson, Conny

    (Research Department, Central Bank of Sweden)

  • Walentin, Karl

    (Research Department, Central Bank of Sweden)

  • Westermark, Andreas

    (Research Department, Central Bank of Sweden)

Abstract

Using a unique dataset of all Swedish housing transactions over the 2009-2017 period, we find that an increase in manufacturing's share of employment is positively associated with house price growth volatility and negatively associated with risk-adjusted housing returns. Both effects appear to be related to manufacturing's impact on firm concentration and employment volatility. Moreover, as we demonstrate in an application, our results have implications for portfolio choice. They also suggest that the manufacturing decline since 1970 could account for a 32% reduction in house price volatility in Sweden, and similar reductions in the U.S., U.K., and Japan.

Suggested Citation

  • Hull, Isaiah & Olovsson, Conny & Walentin, Karl & Westermark, Andreas, 2017. "Manufacturing Decline and House Price Volatility," Working Paper Series 349, Sveriges Riksbank (Central Bank of Sweden), revised 01 Jul 2019.
    • Handle: RePEc:hhs:rbnkwp:0349
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    References listed on IDEAS

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    More about this item

    Keywords

    House Prices; Portfolio Choice; Manufacturing; Volatility;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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