The Credit Channel of Monetary Policy: Evidence from the Housing Market

Matteo Iacoviello () and Raoul Minetti

No 541, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: This paper tests a credit channel of monetary policy (especially a bank-lending channel) in the housing market. We argue that the relevance of the credit channel depends on the structural features of the housing finance system, in particular efficiency and institutional organisation. We employ a structural VAR approach to analyse this issue in four European housing markets (Finland, Germany, Norway and the UK). Our results support the existence of a broad credit channel and, in some contexts, of a bank-lending channel. More importantly, the findings show across countries a clear-cut relationship between presence of a credit (bank-lending) channel, efficiency of housing finance and type of institutions active in mortgage provision.

Keywords: Monetary transmission; bank-lending channel; house prices; vector autoregressions (search for similar items in EconPapers)
JEL-codes: E44 E51 E52 G21 C22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mon and nep-ure
Date: 2002-10-01, Revised 2003-08-29
Note: This paper was previously circulated with the title "The Credit Channel of Monetary Policy and the Housing Market: International Empirical Evidence"
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Journal Article: The credit channel of monetary policy: Evidence from the housing market (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:boc:bocoec:541

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