Article:

On the Link between Oil Price and House Prices in the U.S.: Asymmetric Evidence from State Level Data

Author: Mohsen Bahmani-Oskooee, Seyed Hesam Ghodsi

Start Page: 691
End Page: 732
Volume: 23
Issue Number: 1
Year: 2020
Publication: International Real Estate Review

Abstract:

Since oil is used as an input in the production and delivery process, any change in its price can affect almost all sectors of an economy. Researchers have tried to assess the impact of the rising price of oil on domestic production, inflation, investment, the stock market, etc. In order to determine if inflationary effects of rising oil prices have spread to house prices in the U.S., unlike previous research, we investigate the link between oil prices and house prices by using data from each state of the U.S. Furthermore, for the first time, we engage in asymmetry analysis and find short-run asymmetric effects in almost all of the states but short-run cumulative effects or asymmetric impact in 15 states. Although we also find significant long-run asymmetric effects in 26 states, the results reveal that an increase in oil prices has contributed to house price increase in only 11 states and a decrease in oil prices lowered house prices in only three states.

Keywords

House Prices, Oil Price, Asymmetry Analysis, The United States.

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