Browsing by Author "Seewald, Adrian George"
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- Beyond the bricks : investigating the link between house prices and bankruptcy rates in the US between 2000-2020Publication . Seewald, Adrian George; Cerqueiro, Geraldo Manuel AlvesThis study empirically analyzes the effect of house price changes on bankruptcy filings in the United States from 2000 to 2020. The main type of empirical analysis in this paper is done using a panel regression analysis with fixed effects and control variables on both a county and metropolitan statistical area (MSA) level data. On a county level, house price increases are negatively associated with bankruptcy filings. However, this result is subject to endogeneity concerns. To combat this issue of endogeneity, the main part of paper uses data at an MSA level. An exogenous measure of local house price indexes was created using a combination of longterm average federal mortgage rates, and a local elasticity of buildable land supply following the workings of Chaney et e. When examining the data on an MSA level, this paper finds that the noninstrumented relationship between house prices and bankruptcy filings is similar to that of the county level, a negative correlation. However, when looking at the results of the exogenous measure, they are reversed: as house prices increase, bankruptcy rates also increase. Overall, this study provides valuable insights into the complex relationship between housing prices and bankruptcy rates using real and predicted data and shows that the relationship is not as simple as previously thought.