The Residential Integration of Transnational Regional Economies: Evidence from the 2015 Swiss Franc Appreciation
This paper investigates the differentiated distributional effects of international trade policies on non-tradable goods (housing) and dwelling decisions, focusing on the residential integration of transnational regional economies. We construct a theoretical model for residence choices for a transnational economy with integrated labor market but with heterogeneous consumption, housing, and amenities. Then, we associate this model with the experimental case study of the 2015 Swiss Franc appreciation, which caused a reduction of the consumption goods’ prices denominated in CHF in the Eurozone (EZ) regions at the Swiss borders. Hence, we find that after the shock, Swiss and Italian border Municipalities experienced, respectively, a decrease and increase in housing prices due to the residential relocation of EZ residents from the former to the latter. We provide an empirical transnational Bid-Rent model that effectively describes this mechanism. Finally, several robustness and heterogeneity effects are derived. These results suggest that macroeconomic policies might cause discriminating regional housing effects within a nation driven by the residential integration in a transnational economy.
Transnational economies, location choices, housing prices, spatial relocation