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The Role of the Housing Market in Monetary Transmission

Gabor Vadas and Gergely Kiss
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Gergely Kiss: Magyar Nemzeti Bank

Macroeconomics from EconWPA

Abstract: As part of the monetary transmission studies of the Magyar Nemzeti Bank, this paper attempts to analyse the role of the housing market in the monetary transmission mechanism of Hungary. The housing market can influence monetary transmission through three channels, namely, the nature of the interest burden of mortgage loans, asset (house) prices, and the credit channel. The study first summarises the experiences of developed countries, paying special attention to issues arising from the monetary union. It then examines the developments in the Hungarian housing and mortgage markets in the last 15 years, as well as the expected developments and changes attendant to the adoption of the euro. Using panel econometric techniques, the study investigates the link between macroeconomic variables and house prices in Hungary, and the effect of monetary policy on housing investment and consumption through the wealth effect and house equity withdrawal.

Keywords: Housing; Monetary transmission; Mortgage market; Panel econometrics (search for similar items in EconPapers)
JEL-codes: E52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac, nep-mon and nep-ure
Date: 2005-12-15
Note: Type of Document - pdf; pages: 38
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpma:0512010

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