Journal
JOURNAL OF ECONOMICS AND BUSINESS
Volume 84, Issue -, Pages 79-94Publisher
ELSEVIER SCIENCE INC
DOI: 10.1016/j.jeconbus.2016.02.002
Keywords
Small business finance; House price changes; Forecasting
Categories
Funding
- US Small Business Administration, Office of Advocacy [SBAHQ-13-M-0054]
Ask authors/readers for more resources
In this paper, we use the Kauffman Firm Survey to examine the effect of housing price changes on small business financial variables. We apply macroeconomic forecasting techniques to decompose housing price changes into expected and unexpected components. In addition to investigating the effect of predictable and unpredictable movements in housing prices, we argue that our use of forecast errors allows us to identify plausibly exogenous variation in housing prices. We show that for several measures of small business financing, the unexpected housing price changes have particularly large effects on small business balance sheets. Analysis of specific measures of credit access points to the channels of transmission of housing market disruptions on small business outcomes and suggests that small business owners absorb negative shocks to housing wealth through relatively expensive sources of credit and not through loans from the banking sector. We conclude with policy proposals for reducing the effect of housing market disruptions on small businesses. (C) 2016 Elsevier Inc. All rights reserved.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available