Housing Supply House Prices And Monetary Policy
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Housing Supply House Prices And Monetary Policy
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Author : Meltem Chadwick
language : en
Publisher:
Release Date : 2022
Housing Supply House Prices And Monetary Policy written by Meltem Chadwick and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with Housing categories.
The Housing Supply Channel Of Monetary Policy
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Author : Bruno Albuquerque
language : en
Publisher: International Monetary Fund
Release Date : 2024-02-02
The Housing Supply Channel Of Monetary Policy written by Bruno Albuquerque 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 2024-02-02 with Business & Economics categories.
We study the role of regional housing markets in the transmission of US monetary policy. Using a FAVAR model over 1999q1–2019q4, we find sizeable heterogeneity in the responses of US states to a contractionary monetary policy shock. Part of this regional variation is due to differences in housing supply elasticities, household debt overhang, and housing wealth (volatility). Our analysis indicates that house prices and consumption respond more in supply-inelastic states and in states with large household debt imbalances, where negative housing wealth effects bite more strongly and borrowing constraints become more binding. Moreover, financial stability risks increase sharply in these areas as mortgage delinquencies and foreclosures surge, worsening banks’ balance sheets. Finally, monetary policy may have a stronger effect on housing tenure decisions in supply-inelastic states, where the homeownership rate and price-to-rent ratios decline by more. Our findings stress the importance of regional housing supply conditions in assessing the macrofinancial effects of rising interest rates.
Hot Property
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Author : Rob Nijskens
language : en
Publisher: Springer
Release Date : 2019-06-14
Hot Property written by Rob Nijskens and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-06-14 with Business & Economics categories.
This open access book discusses booming housing markets in cities around the globe, and the resulting challenges for policymakers and central banks. Cities are booming everywhere, leading to a growing demand for urban housing. In many cities this demand is out-pacing supply, which causes house prices to soar and increases the pressure on rental markets. These developments are posing major challenges for policymakers, central banks and other authorities responsible for ensuring financial stability, and economic well-being in general.This volume collects views from high-level policymakers and researchers, providing essential insights into these challenges, their impact on society, the economy and financial stability, and possible policy responses. The respective chapters address issues such as the popularity of cities, the question of a credit-fueled housing bubble, the role of housing supply frictions and potential policy solutions. Given its scope, the book offers a revealing read and valuable guide for everyone involved in practical policymaking for housing markets, mortgage credit and financial stability.
Housing And The Monetary Transmission Mechanism
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Author : Frederic S. Mishkin
language : en
Publisher:
Release Date : 2007
Housing And The Monetary Transmission Mechanism written by Frederic S. Mishkin and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with Housing categories.
The housing market is of central concern to monetary policy makers. To achieve the dual goals of price stability and maximum sustainable employment, monetary policy makers must understand the role that housing plays in the monetary transmission mechanism if they are to set policy instruments appropriately. In this paper, I examine what we know about the role of housing in the monetary transmission mechanism and then explore the implications of this knowledge for the conduct of monetary policy. I begin with a theoretical and empirical review of the main housing-related channels of the transmission mechanism. These channels include the ways interest rates directly influence the user cost of housing capital, expectations of future house-price movements, and housing supply; and indirectly influence the real economy through standard wealth effects from house prices, balance sheet, credit-channel effects on consumer spending, and balance sheet, credit-channel effects on housing demand. I then consider the interaction of financial stability with the monetary transmission mechanism, and discuss the ways in which the housing sector might be a source of financial instability, and whether such instability could affect the ability of a central bank to stabilize the overall macroeconomy. I conclude with a discussion of two key policy issues. First, how can monetary policy makers deal with the uncertainty with regard to housing-related monetary transmission mechanisms? And second, how can monetary policy best respond to fluctuations in asset prices, especially house prices, and to possible asset-price bubbles?
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.
Price Expectations And The U S Housing Boom
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Author : Pascal Towbin
language : en
Publisher: International Monetary Fund
Release Date : 2015-07-30
Price Expectations And The U S Housing Boom written by Pascal Towbin 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 2015-07-30 with Business & Economics categories.
Between 1996 and 2006 the U.S. has experienced an unprecedented boom in house prices. As it has proven to be difficult to explain the large price increase by observable fundamentals, many observers have emphasized the role of speculation, i.e. expectations about future price developments. The argument is, however, often indirect: speculation is treated as a deviation from a benchmark. The present paper aims to identify house price expectation shocks directly. To that purpose, we estimate a VAR model for the U.S. and use sign restrictions to identify house price expectation, housing supply, housing demand, and mortgage rate shocks. House price expectation shocks are the most important driver of the boom and account for about 30 percent of the real house price increase. We also construct a model-based measure of exogenous changes in price expectations and show that this measure leads a survey-based measure of changes in house price expectations. Our main identification scheme leaves open whether expectation shifts are realistic or unrealistic. In extensions, we provide evidence that price expectation shifts during the boom were primarily unrealistic and were only marginally affected by realistic expectations about future fundamentals.
Household Debt And House Prices At Risk A Tale Of Two Countries
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Author : Mr.Adrian Alter
language : en
Publisher: International Monetary Fund
Release Date : 2020-02-28
Household Debt And House Prices At Risk A Tale Of Two Countries written by Mr.Adrian Alter 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 2020-02-28 with Business & Economics categories.
To identify and quantify downside risks to housing markets, we apply the house price-at-risk methodology to a sample of 37 cities across the United States and Canada using quarterly data from 1983 to 2018. This paper finds that downside risks to housing markets in the United States have seemingly fallen over the past decade, while having increased in Canada. Supply-side drivers, valuation, household debt, and financial conditions jointly play a key role in forecasting house price risks. In addition, capital flows are found to be significantly associated with future downside risks to major housing markets, but the net effect depends on the type of flows and varies across cities and forecast horizons. Using micro-level data, we identify households vulnerable to potential housing shocks and assess the riskiness of household debt.
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 Price And Household Debt Interactions In Sweden
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Author : Rima Turk
language : en
Publisher: International Monetary Fund
Release Date : 2015-12-28
Housing Price And Household Debt Interactions In Sweden written by Rima Turk 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 2015-12-28 with Business & Economics categories.
Sweden is experiencing double-digit housing price gains alongside rising household debt. A common interpretation is that mortgage lending boosted by expansionary monetary policy is driving up house prices. But theory suggests the value of housing collateral is also important for household’s capacity to borrow. This paper examines the interactions between housing prices and household debt using a three-equation model, finding that household borrowing impacts housing prices in the short-run, but the price of housing is the main driver of the secular trend in household debt over the long-run. Both housing prices and household debt are estimated to be moderately above their long-run equilibrium levels, but the adjustment toward equilibrium is not found to be rapid. Whereas low interest rates have contributed to the recent surge in housing prices, growth in incomes and financial assets play a larger role. Policy experiments suggest that a gradual phasing out of mortgage interest deductibility is likely to have a manageable effect on housing prices and household debt.
German House Prices And The Effect Of Monetary Policy
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Author : Leisheng Wang
language : en
Publisher:
Release Date : 2014
German House Prices And The Effect Of Monetary Policy written by Leisheng Wang and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
German house price has always been relatively quite stable during the last thirty years. However, according to 2013 October German Bundesbank report, housing prices in several German cities could be overvalued by between 5 percentages and 10 percentages. And the Bundesbank warned that this price level cannot be justified based on fundamental factors. Based on the unit root approach, we also detect the existence of rational bubble in German Residential housing market. There might be many reasons behind this overvaluation, but does the loose monetary policy adopted by ECB since 2008 financial crisis contribute to this overvaluation as well? The increase in money supply and the decrease of interest rate, which one plays a more important role for the housing price increase? By focusing on different economic factors that could contribute to house price rising, like stock market index, general household disposable income, GDP, money supply and mortgage rate, we try to analyze their contribution and effects on housing price with the aid of VAR model. The result of the VAR model shows that stock market index, disposable income and mortgage rate all contribute to housing price increase. However, based on Taylor rule, actually, the too low interest rate is the main driving factors for the rapid increase in housing price during last three years. As German monetary policy is largely determined by European Central Bank, it means the price increase might continue in the near future and the risk of overvaluation cannot be ignored.