June 20, 2025
Rising house prices can reduce productivity: study identifies key economic distortion mechanism
The spectacular growth of house prices in Spain between 2003 and 2007 not only strained the real estate market and accelerated private indebtedness. A study published in The Economic Journal, titled “House Prices and Misallocation: The Impact of Collateral Channel on Productivity” reveals that this dynamic also had less obvious but profoundly relevant consequences: a significant fall in aggregate productivity caused by a misallocation of capital within industrial sectors. The…
