Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/228876
Authors: 
Ehlers, Torsten
Hoffmann, Mathias
Raabe, Alexander
Year of Publication: 
2020
Series/Report no.: 
Working Paper No. 374
Abstract: 
US net capital inflows drive the international synchronization of house price growth. An increase (decrease) in US net capital inflows improves (tightens) US dollar funding conditions for non-US global banks, leading them to increase (decrease) foreign lending to third-party borrowing countries. This induces a synchronization of lending across borrowing countries, which translates into an international synchronization of mortgage credit growth and, ultimately, house price growth. Importantly, this synchronization is driven by non-US global banks' common but heterogenous exposure to US dollar funding conditions, not by the common exposure of borrowing countries to non-US global banks. Our results identify a novel channel of international transmission of US dollar funding conditions: As these conditions vary over time, borrowing country pairs whose non-US global creditor banks are more dependent on US dollar funding exhibit higher house price synchronization.
Subjects: 
House price synchronization
US dollar funding
global US dollar cycle
global imbalances
capital inflows
global banks
global banking network
JEL: 
F34
F36
G15
G21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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