The Drivers of Housing Cycles in Spain

Pau Rabanal () and Aspachs-Bracons, Oriol

No 09/203, IMF Working Papers from International Monetary Fund

Abstract: Since Spain joined the EMU, two main important factors behind the housing boom appear to be the decrease of nominal interest rates and demographic factors. In this paper we estimate a New Keynesian model of a currency area, using data for Spain and the rest of the EMU to study the importance of those factors. We also examine the role of different rigidities and find that labor market frictions are crucial to explain main features of the data. On the other hand, financial frictions that impose a collateral constraint on borrowing do not appear to be relevant.

Keywords: Cross country analysis; Demand; Economic models; European Union; Household credit; Housing; Housing prices; Labor markets; Monetary policy; Private consumption; Private investment; Private savings; Private sector; Spain (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-ure
Date: 2009-09-21

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