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Income Inequality and House Prices across US States

Author

Listed:
  • Edmond Berisha

    (Feliciano School of Business, Montclair State University, Montclair, NJ 07043)

  • John Meszaros

    (U.S. Postal Service, USA)

  • Rangan Gupta

    (Department of Economics, University of Pretoria, Private Bag X20, Hatfield, 0028, South Africa)

Abstract

This paper studies the secular increase in US income inequality and its relation to growing house prices over the past three decades. We explore income inequality's effect on house prices based on a high-frequency (quarterly) data-set for all US states, including the District of Columbia. The analysis show that higher income inequality decreases the growth rate of house prices. However, the relationship differs for the Northeast region. We find higher income inequality corresponds with higher house prices across the states within the Northeast region.

Suggested Citation

  • Edmond Berisha & John Meszaros & Rangan Gupta, 2021. "Income Inequality and House Prices across US States," Working Papers 202134, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:202134
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    References listed on IDEAS

    as
    1. Matteo Iacoviello, 2008. "Household Debt and Income Inequality, 1963–2003," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(5), pages 929-965, August.
    2. Hossein Hassani & Mohammad Reza Yeganegi & Rangan Gupta, 2019. "Does inequality really matter in forecasting real housing returns of the United Kingdom?," International Economics, CEPII research center, issue 159, pages 18-25.
    3. Määttänen, Niku & Terviö, Marko, 2014. "Income distribution and housing prices: An assignment model approach," Journal of Economic Theory, Elsevier, vol. 151(C), pages 381-410.
    4. Zhao, Qingbin & Li, Guoqiang & Gu, Xinhua & Lei, Chun Kwok, 2021. "Inequality hikes, saving surges, and housing bubbles," International Review of Economics & Finance, Elsevier, vol. 72(C), pages 349-363.
    5. Thomas Goda & Chris Stewart & Alejandro Torres García, 2016. "Absolute Income Inequality and Rising House Prices," Documentos de Trabajo de Valor Público 15247, Universidad EAFIT.
    6. Fischer, Manfred M. & Huber, Florian & Pfarrhofer, Michael, 2021. "The regional transmission of uncertainty shocks on income inequality in the United States," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 887-900.
    7. M. Utku Ozmen & M. Koray Kalafatcilar & Erdal Yilmaz, 2019. "The impact of income distribution on house prices," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 19(2), pages 45-58.
    8. Gianni La Cava, 2016. "Housing prices, mortgage interest rates and the rising share of capital income in the United States," BIS Working Papers 572, Bank for International Settlements.
    9. Del Negro, Marco & Otrok, Christopher, 2007. "99 Luftballons: Monetary policy and the house price boom across U.S. states," Journal of Monetary Economics, Elsevier, vol. 54(7), pages 1962-1985, October.
    10. Abebe Hailemariam & Sefa Awaworyi Churchill & Russell Smyth & Kingsley Tetteh Baako, 2021. "Income inequality and housing prices in the very long‐run," Southern Economic Journal, John Wiley & Sons, vol. 88(1), pages 295-321, July.
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    More about this item

    Keywords

    Inequality; House Prices; Regional Studies;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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