INCOME EXPECTATIONS, CREDIT TO HOUSEHOLDS, AND PROPERTY PRICES: EVIDENCE FROM INDONESIA AND BRAZIL

Huson Ali Ahmed ()
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Huson Ali Ahmed: Deakin University

Bulletin of Monetary Economics and Banking, 2020, vol. 23, issue Special Issue, 33-60

Abstract: We investigate the long-term cointegration relation between residential property prices, household credit expansion, and household income expectations and identify the channels through which income expectation impacts residential property prices in the short term for Indonesia and Brazil. We find that improved income expectations raise the demand for credit, impacting residential property prices. Similar improvementsin income expectations also serve as important indicators for credit policy decisions, making more funding available to the household sector against the backdrop of rising property prices. In the short run, property prices respond significantly to one-time shocks in income expectations in Indonesia, while credit to households responds positively to property prices and private consumption expenditures in Brazil.

Keywords: Income expectation; Household credit; Structural breaks; Shocks (search for similar items in EconPapers)
JEL-codes: C5 E1 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:23:y:2020:i:spc:p:33-60

DOI: 10.21098/bemp.v23i0.1174

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