Work

Local Effects of Global Capital Flows: A China Shock in the U.S. Housing Market

Year: 2023

Type: article

Abstract: This paper studies the real effects of foreign real estate capital inflows. Using transaction-level data, we document (i) a “China shock” in the U.S. housing market characterized by surging foreign Chinese housing purchases after 2008, and (ii) “home bias” in these purchases, as they concentrate in neighborhoods historically populated by ethnic Chinese. Exploiting their temporal and spatial variation, we find that these capital inflows raise local employment, with the effect transmitted through a housing net worth channel. However, they displace local lower-income residents. Our results show that real estate capital inflows can both stimulate the real economy and induce gentrification.

Source: Review of Financial Studies

DOI: 10.1093/rfs/hhad067

Authors: Zhimin Li, Leslie Sheng Shen, Calvin Zhang

Institutions: Peking University, Federal Reserve Bank of Boston, Federal Reserve Bank of Philadelphia

Language: English

Topic: Housing Market and Economics

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Reduced inequalities, Sustainable cities and communities, Decent work and economic growth

Open Access status: green

OpenAlex ID: W4386022487

FWCI: 6.072

Cites: 59

Cited by: 34

Related to: 10