Date of Submission
Open Access Senior Thesis
Bachelor of Arts
© 2022 Someswar R Amujala
This paper investigates the relationship between the Paycheck Protec- tion Program (PPP) and real estate price increases. The Paycheck Protection Program was established by the Small Business Association in 2020 to pro- vide forgivable loans to businesses to aid with potential losses from COVID- 19 impacts. I leverage zip code level data across the United States and a fixed effects panel data model to quantitatively measure the PPP’s influence on housing and rental prices. I find a positive and significant relationship between the number of PPP loans disbursed and housing and rental rates. Specifically, a 1% change in the number of PPP loans in a zip code is associ- ated with a 0.02731% change in house prices and 0.0016% change in rental prices. This signals that the large increase in liquidity from PPP funds is as- sociated with investments or discretionary spending, leading to an increase in inflation, and thus as a byproduct, real estate inflation. Furthermore, this relationship is stronger in higher income areas, suggesting that spending habits that differ by income levels influences real estate prices. I conclude by showing how these findings relate to policy decisions, especially those made during times of economic shocks.
Amujala, Someswar, "The Paycheck Protection Program's Effect on Real Estate Prices" (2023). CMC Senior Theses. 3161.
Business Law, Public Responsibility, and Ethics Commons, Econometrics Commons, Economic Theory Commons, Entrepreneurial and Small Business Operations Commons, Growth and Development Commons, Real Estate Commons