House prices and import values: mediating roles of household consumption expenditures and business investment

Abstract

Purpose: This paper aims to examine the mediating effects of household consumption expenditures (HCE) and business investment (BI) on the link between real house prices and imports. Design/methodology/approach: Pooled mean group autoregressive distributed lag and cross-sectional augmented distributed lag estimators are applied on a panel of Organisation for Economic Cooperation and Development nations over the period 1995–2022. Findings: Results reveal a significant and positive association between real house prices and the total value of imports. Analysis also indicates that real house prices have a more substantial impact on services imports compared to imports of durables and consumables goods. In addition, results suggest that real house prices influence imports through two primary channels: HCE (particularly on durables) and BI (especially in the information and communication technology sector). Originality/value: Although some studies examine the relationship between house prices and aggregate trade, to the best of the authors’ knowledge, no study explores the impact of real house prices on various components of imports: consumables, durables and services across a group of countries over time incorporating the mediating effects of HCE and BI.