Fed in Print

Abstract

This paper studies how commodity price movements have affected local house prices in commodity-dependent economies, Australia and New Zealand. We build a geographically hierarchical empirical model and find that commodity prices influence local house prices directly and also indirectly through macroeconomic variables. While commodity price changes function more like “income shocks” rather than “cost shocks” in both Australia and New Zealand, regional heterogeneity is also observed in terms of differential dynamic responses of local house prices to energy versus non-energy commodity price movements. The results are robust to alternative approaches. Directions for future research are also discussed.

Note: Published as: Leung, Charles Ka Yui, Song Shi and Edward Tang (2013), "Commodity House Prices," Regional Science and Urban Economics 43 (6): 875-887.

JEL Classification:

F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

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