Terms-of-trade shocks affect house price fluctuations – paper
Bank of Canada research shows terms of trade shocks explain large percentage of variance in house price growth
A working paper published by the Bank of Canada has highlighted the important influence of terms-of-trade shocks on house prices.
Paul Corrigan, in his paper Terms-of-trade and house price fluctuations: a cross-country study, shows between 16% and 41% of the variance in house price growth across a panel of developed countries between 1994 and 2015 can be attributed to terms-of-trade shocks.
Using a panel vector error-correction model of house prices, household debt and real tradable prices, he
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