@TechReport{CEPII:2013-18,
author={Fran├žois Geerolf and Thomas Grjebine},
title={House Prices Drive Current Accounts: Evidence From Property Tax Variations},
year=2013,
month=June,
institution={CEPII},
type={Working Papers},
url={http://www.cepii.fr/CEPII/fr/publications/wp/abstract.asp?NoDoc=5947},
number={2013-18},
abstract={We study the causal link between house prices and current accounts. Across time and countries, we find a very large and significant impact of house prices on current accounts. In order to rule out endogeneity concerns, we instrument house prices for a panel of countries, using property tax variations. A 10% instrumented appreciation in house prices leads to a deterioration in the current account of 1.7% of GDP. These results are very robust to the inclusion of the determinants of current accounts. Following a house price increase, private savings decrease, through wealth effects rather than consumer-finance based mechanisms, while non-residential investment rises through a relaxation of financing constraints for firms. },
keywords={Current accounts}
}