Search

This study examines the key drivers of real house prices in the five main Euro area countries (Germany, France, Italy, Spain, and the Netherlands) and the Anglo–Saxon economies (the United Kingdom and the United States) from 1970 to 2010. Estimating the determinants of house prices is very important, as they significantly influence economic activity and financial stability. Therefore, a multivariate unobserved component model, introduced by Harvey, has been used to model house price fluctuations. This technique allows us to catch those price movements that are not fully explained by economic fundamentals. The empirical results, in fact, indicate that in addition to changes in real income, long-run interest rates, stock prices and inflation, the latent component has a significant role in explaining real house prices. The latent component reflects those factors that are not specifically observed, such as structural changes in markets and changing preferences.

This paper considers trade specialisation in Russia, examining changes in trade patterns at the sectoral level over the transition period. Trade based on inter-industry specialisation and intra-industry trade (IIT) are empirically distinguished using the Aquino and Grubel–Lloyd (GL) indices. The Aquino index is applied to measure the degree of inter-industry specialisation by sector, while the GL index is used to establish the level of IIT between industries. The empirical results support recent trade theory, which predicts an increasing level of IIT with liberalisation processes. They also suggest how inter- and intra-industry trade coexist. The econometric estimation of the factor content of Russia's exports (specialisation in resource-intensive products) supports the index analysis. Comparative Economic Studies (2007) 49, 232–258. doi:10.1057/palgrave.ces.8100199