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The Environmental Cost of Easy Credit: The Housing Channel

Author

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  • Manuel Adelino
  • David T. Robinson

Abstract

Heating, cooling, and powering the residential housing stock accounts for about one-fifth of total annual greenhouse gas emissions in the US. Home size is a key determinant of energy intensity. The average newly built single-family home is 50% larger than in the 1950s. Using distinct identification strategies spanning the last four decades of banking history, we show that more abundant credit increases average new home size. It also facilitates more construction but does not produce offsetting increases in home quality or durability. These results highlight potential environmental costs associated with monetary policies that expand access to credit.

Suggested Citation

  • Manuel Adelino & David T. Robinson, 2023. "The Environmental Cost of Easy Credit: The Housing Channel," NBER Working Papers 31769, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31769
    Note: CF EEE
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    More about this item

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • 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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