Sergi Basco, David Lopez-Rodriguez, Enrique Moral-Benito
{"title":"House prices and misallocation: the impact of the collateral channel on productivity","authors":"Sergi Basco, David Lopez-Rodriguez, Enrique Moral-Benito","doi":"10.1093/ej/ueae075","DOIUrl":null,"url":null,"abstract":"This paper investigates the impact of local house price booms on capital misallocation within industries. Using the geographical variation provided by the Spanish housing boom (2003-2007), we show that firms exposed to positive local house price shocks received more bank credit and their investment grew more when they had a higher proportion of real estate assets. This collateral channel results in an increasing dispersion of the capital-labor ratio within industries. A counterfactual calculation suggests that the capital misallocation generated by this channel can account for around 40% of the TFP decline experienced by the Spanish economy during the housing boom.","PeriodicalId":501319,"journal":{"name":"The Economic Journal","volume":"185 1","pages":""},"PeriodicalIF":0.0000,"publicationDate":"2024-08-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"The Economic Journal","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1093/ej/ueae075","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
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Abstract
This paper investigates the impact of local house price booms on capital misallocation within industries. Using the geographical variation provided by the Spanish housing boom (2003-2007), we show that firms exposed to positive local house price shocks received more bank credit and their investment grew more when they had a higher proportion of real estate assets. This collateral channel results in an increasing dispersion of the capital-labor ratio within industries. A counterfactual calculation suggests that the capital misallocation generated by this channel can account for around 40% of the TFP decline experienced by the Spanish economy during the housing boom.
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