Non-linear effects of monetary policy shocks on housing: Evidence from a CESEE country

Carlos Cañizares Martínez, Adriana Lojschová and Alicia Aguilar
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Carlos Cañizares Martínez: BANQUE CENTRALE DU LUXEMBOURG
Adriana Lojschová: NATIONAL BANK OF SLOVAKIA
Alicia Aguilar: BANCO DE ESPAÑA

No 2602, Working Papers from Banco de España

Abstract: This paper estimates the effects of standard monetary policy shocks on housing and other macro variables in Slovakia, a CESEE country. For that purpose, we use a non-linear local projection model which uncovers asymmetries in these effects around three different dimensions: high versus low economic growth, interest rates and inflation. The main findings in this study are as follows. First, we often find no evidence of standard monetary policy eliciting a contractionary response in house prices or housing investment. Second, evidence is weakest during recessions and periods of low interest rates or low inflation. Third, these findings may be linked to the inability of monetary policy to trigger significant contractionary effects on household lending, which in turn may be linked to the effective lower bound on interest rates, the predominance of fixed-rate mortgages in Slovakia or interaction between monetary and macroprudential policy. We also discuss the possible country characteristics that might drive these results and policy implications.

Keywords: monetary policy; non-linearities; local projections; euro area (search for similar items in EconPapers)
JEL-codes: C32 C36 E42 E52 E58 R21 R31 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2026-01
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:2602

DOI: 10.53479/42325

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