All Library Books, journals and Electronic Records Telegrafenberg

Your email was sent successfully. Check your inbox.

An error occurred while sending the email. Please try again.

Proceed reservation?

  • 1
    Amsterdam: Elsevier | ZBW – Leibniz Information Centre for Economics Kiel, Hamburg
    Publication Date: 2020-01-03
    Description: What are the economic effects of a central bank that takes the evolution of house prices into account? In an attempt to answer this question, we use a New Keynesian dynamic stochastic general equilibrium model with a housing sector to explore the economic impacts of a central bank reacting to house price inflation. We examine this in the context of two different shocks that are associated with two factors cited as possible underlying sources of the recent bubble in the housing market and the ensuing financial crisis. First, we allow for a positive shock to the household borrowing constraint. Second, we analyze the effects of a preference shock to housing. Our results indicate that these two shocks lead to a more pronounced increase in house prices and an expansion of the housing sector if the central bank does not react to house prices. If the central bank reacts to house price increases, it must accept lower output growth rates over the business cycle. We also show that welfare decreases if a central bank reacts to house price inflation. Because of these effects, a central bank may be reluctant to react to house price inflation.
    Keywords: E21 ; E22 ; E58 ; R21 ; ddc:330 ; Housing Demand ; House Prices ; Interest Rates ; Consumption and Saving
    Repository Name: EconStor: OA server of the German National Library of Economics - Leibniz Information Centre for Economics
    Language: English
    Type: doc-type:article
    Location Call Number Expected Availability
    BibTip Others were also interested in ...
Close ⊗
This website uses cookies and the analysis tool Matomo. More information can be found here...