Quotation Crespo Cuaresma, Jesus, Breitenfellner, Andreas, Mayer, Philipp. 2015. Energy Inflation and House Price Corrections. Energy Economics 48 S. 109-116.




We analyze empirically the role played by energy inflation as a determinant of downward corrections in house prices. Using a dataset for 18 OECD economies spanning the last four decades, we identify periods of downward house price adjustment and estimate conditional logit models to measure the effect of energy inflation on the probability of these house price corrections after controlling for other relevant macroeconomic variables. Our results give strong evidence that increases in energy price inflation raise the probability of such corrective periods taking place. This phenomenon could be explained by various channels: through the adverse effects of energy prices on economic activity and income reducing the demand for housing; through the particular impact on construction and operation costs and their effects on the supply and demand of housing; through the reaction of monetary policy on inflation withdrawing liquidity and further reducing demand; through improving attractiveness of commodity versus housing investment on asset markets; or through a lagging impact of common factors on both variables, such as economic growth. Our results contribute to the understanding of the pass-through of oil price shocks to financial markets and imply that energy price inflation should serve as a leading indicator for the analysis of macro-financial risks.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Energy Economics
Citation Index SSCI
WU Journalrating 2009 A
WU-Journal-Rating new FIN-A, STRAT-B, VW-B, WH-B
Language English
Title Energy Inflation and House Price Corrections
Volume 48
Year 2015
Page from 109
Page to 116
Reviewed? Y
DOI http://dx.doi.org/10.1016/j.eneco.2014.08.023


Crespo Cuaresma, Jesus (Details)
Breitenfellner, Andreas
Mayer, Philipp
Department of Economics (Crespo Cuaresma) (Details)
Research Institute for Human Capital and Development FI (Former organization)
Competence Center for Sustainability Transformation and Responsibility WE (Details)
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