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Exports and Property Prices in France: Are They Connected?

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  • Balázs Égert
  • Rafaƚ Kierzenkowski

Abstract

type="main" xml:id="twec12122-abs-0001"> France has seen a marked deterioration in its export performance in the last 10 years or so. Previous empirical research pointed out that weak export performance was due to (i) vigorous domestic demand, (ii) lower markups due to head-to-head competition with Germany, (iii) low non-price competitiveness of French export goods, (iv) offshoring of entire production processes (especially in the automobile sector), and (v) difficulties of French manufacturing firms to reach critical size for exporting. This paper adds an additional explanation to this list. We argue that resource reallocation from the exporting to the construction sector triggered by fast rising property prices hindered France to meet world export demand vis-à-vis its products. Our econometric analysis shows that the resource reallocation argument helps explain French export performance between the early 2000s and 2007, unexplained by traditional models. This result is confirmed for a set of OECD countries that experienced a marked decline in their export performance and sustained real estate boom after 2000.

Suggested Citation

  • Balázs Égert & Rafaƚ Kierzenkowski, 2014. "Exports and Property Prices in France: Are They Connected?," The World Economy, Wiley Blackwell, vol. 37(3), pages 387-409, March.
    • Handle: RePEc:bla:worlde:v:37:y:2014:i:3:p:387-409
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    File URL: http://hdl.handle.net/10.1111/twec.2014.37.issue-3
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Real estate-driven exports
      by ? in VoxEU.org on 2013-10-02 06:00:00

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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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