Monetary Policy Expectations, Fund Managers, and Fund Returns: Evidence from China

Board of Governors of the Federal Reserve System (U.S.), John Ammer, John Rogers, Gang Wang, Yang Yu, Board of Governors of the Federal Reserve Syatem (U.S.), Board of Governors of the Federal Reserve Syatem (U.S.), Shanghai University of Finance and Economics, Shanghai University of Finance and Economics
2020 International Finance Discussion Paper  
We study the effects of foreign real estate capital flows on local asset prices and employment using detailed housing transactions data. We document (i) a "China shock" in the U.S. real estate market after 2007 driven by the Chinese government's house purchase restrictions and (ii) "home bias" in foreign Chinese housing purchases in the United States as they are concentrated in ZIP codes historically populated by ethnic Chinese. Exploiting the quasi-random temporal and spatial variation of real
more » ... estate capital inflows from China, we find that foreign Chinese housing purchases have a positive and significant effect on local housing and labor markets. A one standard deviation increase in exposure to these purchases explains 24% and 18% of the cross-ZIP-code variation in local house prices and employment, respectively, with the employment effect transmitted through a housing net worth channel. We also show that these purchases drive out lower-income residents. Our results highlight the role of foreign real estate capital flows in both stimulating the real economy and inducing gentrification in local economies.
doi:10.17016/ifdp.2020.1286 fatcat:isx62k55sbgu7boqr2pguodxwm