Navigating the housing channel of monetary policy across euro area regions

Niccolò Battistini, Matteo Falagiarda, Angelina Hackmann and Moreno Roma

No 2752, Working Paper Series from European Central Bank

Abstract: 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 transmission 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. JEL Classification: D31, E32, E44, E52, R31

Keywords: business cycles; conventional and unconventional monetary policy; housing market; regional in-equality (search for similar items in EconPapers)
Date: 2022-11
New Economics Papers: this item is included in nep-cba, nep-eec, nep-mon and nep-ure
Note: 2438814
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Navigating the housing channel of monetary policy across euro area regions (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20222752

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