House Prices and Inflation: A Cointegration Analysis for Finland and Sweden

Bharat Barot () and K. Takala

Studies in Economics and Finance from Bank of Finland

Abstract: Given the emphasis on price stability in monetary policy, the concern caused by recent rapid increases in housing prices are understandable. It is suspected that such rises may provide early indication of mounting inflationary pressure. The purpose of this paper is to formulate and estimate an error-correction system model for housing prices and inflation for forecasting purposes. By using the estimated cointegrating vector, we also get an estimate of the equilibrium level for house prices that might be helpful in analysing the current situation in the housing market and the stance for monetary policy.

Keywords: PRICES; HOUSING; INFLATION; ECONOMIC MODELS (search for similar items in EconPapers)
JEL-codes: R31 R32 (search for similar items in EconPapers)
Date: Written
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Related works:
Working Paper: House Prices and Inflation: A Cointegration Analysis for Finland and Sweden (1998)
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Persistent link: http://EconPapers.repec.org/RePEc:fth:bfsefi:12/98

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