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House prices and unemployment: an empirical analysis of causality
Kristianstad University, Faculty of Business, Avdelningen för ekonomi.ORCID iD: 0000-0003-0447-9349
2019 (English)In: International Journal of Housing Markets and Analysis, ISSN 1753-8270, E-ISSN 1753-8289, Vol. 12, no 1, p. 148-164Article in journal (Refereed) Published
Abstract [en]

Purpose

This paper aims to examine whether there exists a long-run causal relationship between house prices and unemployment rates for eight major European countries.

Design/methodology/approach

The bootstrap panel Granger causality approach that accounts for cross-sectional dependence, slope heterogeneity and structural breaks is used to detect the direction of causality.

Findings

The empirical findings for the overall panel support the presence of unidirectional causality running from house prices to unemployment.

Practical implications

The findings are not only important for households but also for policymakers concerned with economic and financial stability.

Originality/value

There are only a limited number of studies that have investigated the direct link between house prices and employment or unemployment. Given the increased importance of labor market variables, particularly the choice of the unemployment rate as a key indicator in designing forward guidance and the increased financial stability concerns regarding house price dynamics, it is important to better understand the causal linkages between house prices and unemployment rates. To the best of the author’s knowledge, this paper is the first to apply the bootstrap panel Granger causality approach to examine the relationship between house prices and unemployment rates.

Place, publisher, year, edition, pages
2019. Vol. 12, no 1, p. 148-164
Keywords [en]
House prices, Households, Financial stability, Home ownership, Panel causality, Unemployment rates, R21, E24, J64
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:hkr:diva-19108DOI: 10.1108/IJHMA-03-2018-0021ISI: 000458651300010OAI: oai:DiVA.org:hkr-19108DiVA, id: diva2:1292100
Available from: 2019-02-27 Created: 2019-02-27 Last updated: 2019-02-28Bibliographically approved

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Irandoust, Manuchehr
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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf