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471 - Energy Inflation and House Price Corrections

Author(s): Andreas Breitenfellner, Jesús Crespo Cuaresma, Philipp Mayer

Energy Inflation and House Price Correctionspdf(756 kB) Choose translations of the previous link 

Summary for non-specialistspdf(26 kB) Choose translations of the previous link 

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.

(European Economy. Economic Papers 471. November 2012. Brussels. PDF. 26pp. Tab. Graph. Ann. Free.)

KC-AI-12-471-EN-N (online)
ISBN 978-92-79-22992-3 (online)
doi: 10.2765/27743 (online)

JEL classification: C33, G01, Q43, R21, R31

Economic Papers are written by the staff of the Directorate-General for Economic and Financial Affairs, or by experts working in association with them. The Papers are intended to increase awareness of the technical work being done by staff and to seek comments and suggestions for further analysis. The views expressed are the author’s alone and do not necessarily correspond to those of the European Commission.