Magnification of the 'China Shock' Through the U.S. Housing Market / Yuan Xu, Hong Ma, Robert C. Feenstra.

Format:

Book

Author/Creator:

Xu, Yuan.

Contributor:

National Bureau of Economic Research.

Ma, Hong.

Feenstra, Robert C.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26432.

NBER working paper series no. w26432

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

The 'China shock' operated in part through the housing market, which is one reason why its impact was so large in the United States. We add housing to a multi-region monopolistic competition model, with individuals choosing whether and where to work. Controlling for housing reduces the negative coefficient of import exposure on manufacturing employment by 20-25%, with a significant indirect magnification through the housing market. Combining manufacturing and construction employment, the indirect effect of the China shock through the housing market explains one-fifth as much of the variance in employment as the direct effect of import exposure, with further employment impacts through independent fluctuations in the housing market.

Notes:

Print version record

November 2019.