House Prices And Monetary Policy In The Euro Area
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House Prices And Monetary Policy In The Euro Area
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Author :
language : en
Publisher:
Release Date : 2017
House Prices And Monetary Policy In The Euro Area written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
We use a Bayesian stochastic search variable selection structural VAR model to investigate the heterogeneous impact of housing demand shocks on the macro-economy and the role of house prices in the monetary policy transmission, across euro area countries. A novel set of identification restrictions, which combines zero and sign restrictions, is proposed. By exploiting the cross-sectional dimension of our data, we explore the differences in the propagation channels of house prices and monetary policy and the challenges they pose in the process of real and nominal convergence in the Eurozone. Among the main results, we find a comparatively stronger housing wealth effect on consumption in Ireland and Spainches We provide new evidence in support of the financial accelerator hypothesis, showing that house prices play an important role in the availability of loans. A significant and highly heterogeneous effect of monetary policy on house price dynamics is also documented.
The Housing Market Channel Of Monetary Policy Transmission In The Euro Area
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Author : Stanimira Milcheva
language : en
Publisher:
Release Date : 2020
The Housing Market Channel Of Monetary Policy Transmission In The Euro Area written by Stanimira Milcheva and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.
Purpose: The purpose of this paper is to explore the role of the housing market in the monetary policy transmission to consumption among euro area member states. It has been argued that the housing market in one country is then important when its mortgage market is well developed. The countries in the euro area follow unitary monetary policy; however, their housing and mortgage markets show some heterogeneity, which may lead to different policy effects on aggregate consumption through the housing market. Design/methodology/approach: The housing market can act as a channel of monetary policy shocks to household consumption through changes in house prices and residential investment - the housing market channel. The authors estimate vector auto-regressive models for each country and conduct a counterfactual analysis to disentangle the housing market channel and assess its importance across the euro area member states. Findings: The authors find little evidence for heterogeneity of the monetary policy transmission through house prices across the euro area countries. Housing market variations in the euro area seem to be better captured by changes in residential investment rather than by changes in house prices. As a result, the authors do not find significantly large house price channels. For some of the countries however, they observe a monetary policy channel through residential investment. The existence of a housing channel may depend on institutional features of both the labor market or with institutional factors capturing the degree of household debt as is the loan-to-value ratio. Originality/value: The study contributes to the existing literature by assessing whether a unitary monetary policy has a different impact on consumption across the euro area countries through their housing and mortgage markets. The authors disentangle monetary-policy-induced effects on consumption associated with variations on the housing markets due to either house price variations or residential investment changes. The authors show that the housing market can play a role in the monetary transmission mechanism even in countries with less developed mortgage markets through variations in residential investment.
The Effects Of Housing Prices And Monetary Policy In A Currency Union
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Author : Oriol Aspachs-Bracons
language : en
Publisher: International Monetary Fund
Release Date : 2011-01-01
The Effects Of Housing Prices And Monetary Policy In A Currency Union written by Oriol Aspachs-Bracons and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011-01-01 with Business & Economics categories.
The recent boom-and-bust cycle in housing prices has refreshed the debate on the drivers of housing cycles as well as the appropriate policy response. We analyze the case of Spain, where housing prices have soared since it joined the EMU. We present evidence based on a VAR model, and we calibrate a New Keynesian model of a currency area with durable goods to explain it. We find that labor market rigidities provide stronger amplification effects to all type of shocks than financial frictions do. Finally, we show that when the central bank reacts to house prices, the non-durable sector suffers an important contraction. As a result, the boom-and-bust cycle would not have been avoided if Spain had remained outside the EMU during the 1996-2007 period.
Navigating The Housing Channel Of Monetary Policy Across Euro Area Regions
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Author : Niccolò Battistini
language : en
Publisher:
Release Date : 2022
Navigating The Housing Channel Of Monetary Policy Across Euro Area Regions written by Niccolò Battistini and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with categories.
This paper assesses the role of the housing market in the transmission of conventional and unconventional monetary policy across euro area regions. By exploiting a novel regional dataset on housing-related variables, a structural panel VAR analysis shows that monetary policy propagates effectively to economic activity and house prices, albeit in a heterogeneous fashion across regions. Although the housing channel plays a minor role in the transmission of monetary policy to the economy on average, its importance increases in the case of unconventional monetary policy. We also explore the determinants of the diverse transmis- sion of monetary policy to economic activity across regions, finding a larger impact in areas with lower labour income and more widespread homeownership. An expansionary monetary policy can thus be effective in mitigating regional inequality via its stimulus to the economy.
House Prices And The Macroeconomy
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Author : Charles Goodhart
language : en
Publisher: Oxford University Press
Release Date : 2007
House Prices And The Macroeconomy written by Charles Goodhart and has been published by Oxford University Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with Business & Economics categories.
House price bubbles, and their aftermath, have become a focus of macro-economic policy concern in most developed countries. This book elucidates the two-way relationship between house-price fluctuations and economic fundamentals. Housing has many features which make it distinct from other assets, like equity. Real estate is not only an asset but also a durable consumption good for households, providing shelter and other housing services. As a result, a house is often the largest and most important asset of households and therefore accounts for a major share of household wealth. Similarly a large share of bank assets is tied to housing values. House price fluctuations may, therefore, have a major effect on economic activity and the soundness of the financial system. Following an introductory chapter, the book is structured into three parts. The first demonstrates the importance of house prices as determinants or indicators of inflation and economic activity. The second focuses on the inter-relationships between bank credit extension and housing prices, and how bubbles can lead to financial crises. The third discusses resultant public policy issues, such as whether, and how, to include housing prices in a general inflation index, and how to restrain the housing/bank credit cycle.
Housing Market Stability Mortgage Market Structure And Monetary Policy
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Author : Bing Zhu
language : en
Publisher:
Release Date : 2020
Housing Market Stability Mortgage Market Structure And Monetary Policy written by Bing Zhu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with categories.
This paper investigates how monetary policy stance and mortgage market structure affect non-fundamental house price movements in eleven Euro area countries. Based on a three-stage approach, our empirical evidence suggests that a one-time monetary-easing shock can significantly trigger house price booms in Euro area countries with liberal mortgage markets. Such shocks can explain over 20% of the forecasting error variance of non-fundamental house price run-ups in Ireland and Spain. We find that, in countries with more regulated mortgage markets, monetary policy stance does not significantly affect non-fundamental house prices. Policymakers may wish to focus on limiting mortgage equity withdrawals and on monitoring loan-to-value ratios and tax policies in order to minimize the side effects of accommodative monetary policies on housing market stability for Euro area countries. We posit that this is especially true for peripheral countries, which are more likely to be subjected to overly loose monetary policy stances.
Macroprudential Policies And House Prices In Europe
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Author : Mr.Marco Arena
language : en
Publisher: International Monetary Fund
Release Date : 2020-02-20
Macroprudential Policies And House Prices In Europe written by Mr.Marco Arena and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-02-20 with Business & Economics categories.
Macroprudential policy in Europe aligns with the objective of limiting systemic risk, namely the risk of widespread disruption to the provision of financial services that is caused by an impairment of all or parts of the financial system and that can cause serious negative consequences for the real economy.
Monetary Policy And Housing Prices In An Estimated Dsge For The Us And The Euro Area
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Author : Matthieu Darracq Paries
language : en
Publisher:
Release Date : 2009
Monetary Policy And Housing Prices In An Estimated Dsge For The Us And The Euro Area written by Matthieu Darracq Paries and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with categories.
We estimate a two-country Dynamic Stochastic General Equilibrium model for the US and the euro area including relevant housing market features and examine the monetary policy implications of housing-related disturbances. In particular, we derive the optimal monetary policy cooperation consistent with the structural specification of the model. Our estimation results reinforce the existing evidence on the role of housing and mortgage markets for the US and provide new evidence on the importance of the collateral channel in the euro area. Moreover, we document the various implications of credit frictions for the propagation of macroeconomic disturbances and the conduct of monetary policy. We find that allowing for some degree of monetary policy response to fluctuations in the price of residential goods improves the empirical fit of the model and is consistent with the main features of optimal monetary policy response to housing-related shocks.
Bubbles In Real Estate
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Author : Daniel Gros
language : en
Publisher: CEPS
Release Date : 2006
Bubbles In Real Estate written by Daniel Gros and has been published by CEPS this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Housing categories.
Instability Of The Eurozone
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Author : Ansgar Belke
language : en
Publisher:
Release Date : 2008
Instability Of The Eurozone written by Ansgar Belke and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with categories.