In this paper, we investigate the effect of real estate prices on productive investment. We build a simple theoretical … framework of firms' investment with credit rationing and real estate collateral. We show that real estate prices affect firms … identification of the second channel allows for heterogeneous effects of real estate prices on investment across firms. We test our …

or R&D spending. We use the housing price component independent of firms' investment opportunity and credit supply shocks … existence of the collateral channel as housing price growth and firm investment exhibit a positive relationship. This collateral … notable finding is that despite the collateral channel, large housing price booms are detrimental to investment, which …

out that our baseline specification uses a common scaling factor (lagged capital stock) for our dependent (investment) and … investment. We describe these leads in the note, hoping that they will inspire future research …