The Unassuming Economist

From a new IMF working paper by Davide Furceri and Grace Li:

“This paper provides new empirical evidence of the macroeconomic effects of public investment in developing economies. Using public investment forecast errors to identify unanticipated changes in public investment, the paper finds that increased public investment raises output in the short and medium term, with an average short-term fiscal multiplier of about 0.2. We find some evidence that the effects are larger: (i) during periods of slack; (ii) in economies operating with fixed exchange rate regimes; (iii) in more closed economies; (iv) in countries with lower public debt; and (v) in countries with higher investment efficiency. Finally, we show that increases in public investment tend to lower income inequality.”

The IMF’s latest report on Cambodia says that: “Real estate sector-related bank credit growth remains strong, supported by demand for housing from Cambodia’s young and growing middle-income population. Anecdotal evidence, however, suggests that some segments of the property market are cooling. (…) They noted strong demand for affordable housing from the emerging middle-class and continued monitoring banks’ internal rules governing LTV ratios for mortgages, which appear conservative.”

On cross-country:

• Risks in International Housing Markets – Reserve Bank of Australia
• Interest rates and house prices in the United States and around the world – Bank for International Settlements
• The State of Housing in the EU 2017 – Housing Europe
• Housing Markets: A European Perspective – Seeking Alpha
• Inclusive City Development: City-Wide Slum Upgrading and Housing Development – World Resource Institute
• International housing policies – CMHC

On the US:

• Paying For Dirt: Where Have Home Values Detached From Construction Costs? – BuildZoom
• First-Time Homebuyers: Toward a New Measure – Federal Reserve Bank of Philadelphia
• Don’t Worry About Inflation. Solve the Housing Shortage. – Bloomberg
• The Barriers Stopping Poor People From Moving to Better Jobs – The Atlantic
• How Historic Racial Injustices Still Impact Housing Today – Zillow
• Reducing Work Disincentives in the Housing Choice Voucher Program: Rent Reform Demonstration Baseline Report – U.S. Department of Housing and Urban Development

On other countries:

• [Canada] Canada’s Bank Regulator Toughens Mortgage Qualifying Rules – Bloomberg
• [Canada] Canadian housing agency says it can withstand severe downturn – Reuters
• [China] Chinese property boom props up Xi’s hopes for the economy – Financial Times
• [China] Chinese Cities Buy Off Housing Glut With Borrowed Money – Wall Street Journal
• [Hong Kong] Nano apartments rise to HK’s housing challenge – Financial Times
• [Sweden] Warning Signs Are Mounting for Sweden’s Once-Hot Housing Market – Bloomberg
• [Sweden] ‘The risks have definitely increased’ – Sweden’s housing boom wobbles – Financial Times
• [United Kingdom] Curbs on UK housing benefit making system ‘irrelevant’, IFS warns – Financial Times

Photo by Aliis Sinisalu

My paper with Sangyup Choi, Davide Furceri, and Yi Huang on the effects of effect of aggregate uncertainty shocks on sectoral productivity is now forthcoming in the Journal of International Money and Finance and is available (link) at the JIMF website. First, we find that an increase in aggregate uncertainty reduces productivity growth more in industries that depend heavily on external finance. Second, the mechanism at play is that during periods of high uncertainty, firms that are credit constrained switch the composition of investment by reducing productivity-enhancing investment that is more subject to liquidity risks. Third, the mechanism is stronger during recessions, when credit constraints bind more. For those without access to JIMF, an earlier working paper (link) version is available.

On cross-country:

• Global urban house price index records slower growth – Knight Frank
• Global Residential Cities Index – Q2 2017 – Knight Frank
• The State of Housing in the EU 2017 – Housing Europe
• Transparent and efficient social housing – Housing Europe

On the US:

• Sixth annual AEI and CRN conference on housing risk – American Enterprise Institute
• Gentrification and the Amenity Value of Crime Reductions: Evidence from Rent Deregulation – NBER
• What happens to U.S. home prices after Fed rate increase? – Real Estate Decoded

On other countries:

• [Australia] Chinese Investors Keep Pouring Money Into Australian Housing – Bloomberg
• [Canada] Government Eyeing ‘All Options’ to Cool Vancouver Housing Market – Bloomberg
• [United Arab Emirates] Dubai: Premiums Under the Microscope – Reidin

Photo by Aliis Sinisalu