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June 2020 Capital Flows, Asset Prices, and the Real Economy: A "China Shock" in the U.S. Real Estate Market Zhimin Li, Leslie Sheng Shen , Calvin Zhang Abstract: We study the effects of foreign real estate capital flows on local asset prices and employment using detailed housing transactions data. We document (i) a "China shock" in the U.S. real estate market after 2007 driven by the Chinese government's house purchase restrictions and (ii) "home bias" in foreign Chinese housing purchases in the United States as they are concentrated in ZIP codes historically populated by ethnic Chinese. Exploiting the quasi-random temporal...
