The maple bubble : a history of migration among canadian provinces

Gómez-González, José Eduardo; Sanín-Restrepo, Sebastián

The maple bubble : a history of migration among canadian provinces

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Borradores de Economía; No. 992

Date published

2017-05-02

Date

2017-05-02

Authors

Gómez-González, José Eduardo
Sanín-Restrepo, Sebastián

Document language

eng

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Las opiniones contenidas en el presente documento son responsabilidad exclusiva de los autores y no comprometen al Banco de la República ni a su Junta Directiva.

The opinions contained in this document are the sole responsibility of the author and do not commit Banco de la República or its Board of Directors.

Abstract

This study reports evidence of the existence of house price bubbles in several Canadian provinces around the recent global financial crisis. Using a wealth of monthly data for about a thirty-year period we find evidence supporting the hypothesis that the bubble in Quebec transmitted to four other Canadian provinces. Using a recently developed migration test, we show evidence of time-varying transmission intensities. In all cases an inverted U-shape is encountered, suggesting that initially migrations gain strength and then decrease after a maximum point is reached. Interestingly, intensities increase significantly around the maximum point of the bubble in Quebec. Our results have important implications for the design of housing market policies.