Economic Policy Uncertainty and Housing Prices: Evidence from Asia Pacific countries.
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Feier Sun
College:
College of Business and Public Management
Major:
Finance
Faculty Research Advisor(s):
Nazif Durmaz
Abstract:
Economic uncertainty refers to a situation where the future economic environment is difficult to predict and there are high risks or unknown factors. It affects governments, firms, and households to make different economic decisions. Economic Policy Uncertainty (EPU) index based on the frequency of newspaper coverage. The index indicates its effectiveness in capturing movements in policy-related economic uncertainty. This article employs quarterly data from 1990 to 2022 to examine household income, interest rates, and economic policy uncertainty (EPU) on housing prices in New Zealand, South Korea, Japan, Australia, China, and Singapore. The empirical study is conducted through the Autoregressive Distributed Lag (ARDL) bounds cointegration test. The results further show that economic policy uncertainty has both long-term and short-term positive effects on house prices, but in New Zealand, economic policy uncertainty harms house prices, and in Australia, economic policy uncertainty has a short-term negative impact on house prices. These results provide strong evidence for the critical role of economic policy uncertainty in shaping real estate markets in Asia Pacific.