Do Central Banks React to House Prices?

Daria Finocchiaro and Virginia Queijo von Heideken

No 217, Working Paper Series from Sveriges Riksbank (Central Bank of Sweden)

Abstract: The substantial fluctuations in house prices recently experienced by many industrialized economies have stimulated a vivid debate on the possible implications for monetary policy. In this paper, we ask whether the U.S. Fed, the Bank of Japan and the Bank of England have reacted to house prices. We study the responses of these central banks by estimating a structural model for each country where credit constrained agents borrow against real estate. The main result is that house price movements did play a separate role in the U.S., U.K.. and Japanese central bank reaction functions.

Keywords: House prices; monetary policy; DSGE models; Bayesian estimation (search for similar items in EconPapers)
JEL-codes: E31 E44 E52 E58 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2007-11-01, Revised 2009-08-01
New Economics Papers: this item is included in nep-cba, nep-dge, nep-mac, nep-mon and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Related works:
Journal Article: Do Central Banks React to House Prices? (2013)
Journal Article: Do Central Banks React to House Prices? (2013)
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