## Housing Booms and Productivity Growth

_IMF Working Papers, August 15, 2025_

## Source details

**Canonical URL:** [Housing Booms and Productivity Growth](https://www.imf.org/en/publications/wp/issues/2025/08/15/housing-booms-and-productivity-growth-569264)

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- [Markdown version](/en/publications/wp/issues/2025/08/15/housing-booms-and-productivity-growth-569264/index.md)
- [Structured JSON version](/en/publications/wp/issues/2025/08/15/housing-booms-and-productivity-growth-569264/index.json)
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## Bibliographic details
- Authors: Yuanchen Yang, Flora Lutz, Lucy Qian Liu
- Published: August 15, 2025
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229018548.001

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### Overview
- Title: Housing Booms and Productivity Growth
- Authors: Yuanchen Yang, Flora Lutz, Lucy Qian Liu
- Date: August 15, 2025
- Scope: Nexus between persistent house price increases and productivity growth in Canada, with a focus on the collateral channel.

### Methods and Data
- The paper presents a stylized model explaining the mechanism of the collateral channel.
- Empirical analysis uses detailed firm-level data spanning from 2000 to 2023.

### Key Findings
- Model-level insight:
  - The stylized model isolates the collateral channel as a mechanism linking house price dynamics to firm investment and productivity.
- Firm-level empirical findings:
  - There is a negative correlation between firm productivity and its real estate holdings.
  - Rising house prices dampen investment for firms with fewer tangible assets.
  - Rising house prices stimulate investment for firms with more tangible assets.
- Industry-level empirical findings:
  - On average, overall productivity may increase with rising house prices.
  - Industries with significant tangible asset holdings exhibit an opposite trend (productivity declines), suggesting potential resource misallocation associated with a persistent housing market boom.

### Policy Implications and Interpretation
- Persistent housing market booms can distort capital allocation via the collateral channel.
- Differential effects by firms’ tangible asset holdings imply heterogeneous impacts:
  - Firms with fewer tangible assets may face crowding-out of productive investment when house prices rise.
  - Firms with more tangible assets may expand investment that could reflect reallocation toward asset-intensive activities.
- At the industry level, rising house prices can coincide with average productivity gains but mask declines in asset-intensive industries, indicating a risk of resource misallocation.

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2025/08/15/housing-booms-and-productivity-growth-569264_