Abstract
In this paper, we analyze the relationship between house prices and the trade balance in South Africa using an agnostic identification procedure. We apply a Bayesian vector autoregression (VAR) to quarterly data from 1979:Q1 to 2011:Q4 and find that 1% decline in house prices can improve the trade balance by 0.2%. This suggests that house prices represent an additional instrument for trade balance adjustment besides the traditional exchange rate channel. Moreover, the effect of housing demand shock on the exchange rate is short-lived and insignificant; hence, house prices affect the trade balance mainly through the wealth and balance sheet effects on consumption and investment, respectively.
| Original language | English |
|---|---|
| Pages (from-to) | 107-126 |
| Number of pages | 20 |
| Journal | Journal of Housing Research |
| Volume | 24 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 2015 |
| Externally published | Yes |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 10 Reduced Inequalities -
SDG 17 Partnerships for the Goals
ASJC Scopus subject areas
- Business, Management and Accounting (miscellaneous)
- Economics, Econometrics and Finance (miscellaneous)
- Urban Studies
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