The housing price boom of the late ’90s: did inflation targeting matter?

Sébastien Frappa () and Jean-Stéphane Mésonnier ()

Documents de Travail from Banque de France

Abstract: The recent boom in housing markets of most developed economies has spurred criticism that inflation targeting central banks may have neglected the build-up of financial imbalances. This paper provides a formal empirical test of such claims, using a standard program evaluation methodology to correct for a possible bias due to self-selection into inflation targeting. We consider 17 industrial economies over 1980-2006, among which nine countries have targeted inflation a some dates. We find robust evidence of a significant positive effect of inflation targeting on real housing price growth and on the housing price to rent ratio.

Keywords: Inflation targeting; Housing prices; Treatment effect; OECD countries. (search for similar items in EconPapers)
JEL-codes: E4 E52 E58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-ure
Date: 2009

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Persistent link: http://EconPapers.repec.org/RePEc:bfr:banfra:255

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