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Housing as Collateral, Financial Constraints, and Small Businesses

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  • Taejun Lim

    (Dongguk University)

Abstract

What drove the synchronization between the small business sector and the housing market during the U.S. housing market boom and bust in the 2000s? I develop an occupational choice model in which house price fluctuations affect the entry-exit and expansion-contraction decisions of small business owners through the housing collateral channel. I perform an experiment in which a sequence of housing shocks constructed to replicate the observed housing market conditions in the 2000s are plugged into the calibrated model. The experiment shows that the synchronization is due mainly to the housing collateral effect. (Copyright: Elsevier)

Suggested Citation

  • Taejun Lim, 2018. "Housing as Collateral, Financial Constraints, and Small Businesses," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 30, pages 68-85, October.
    • Handle: RePEc:red:issued:15-316
    DOI: 10.1016/j.red.2018.03.001
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    4. Maria Chiara Cavalleri & Boris Cournède & Volker Ziemann, 2019. "Housing markets and macroeconomic risks," OECD Economics Department Working Papers 1555, OECD Publishing.
    5. Sangyup Choi & Kimoon Jeong & Jiseob Kim, 2024. "Asymmetric Mortgage Channel of Monetary Policy: Refinancing as a Call Option," Working papers 2024rwp-228, Yonsei University, Yonsei Economics Research Institute.

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    More about this item

    Keywords

    Housing collateral; Small business; Entrepreneurship;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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