Optimal interest rate rule in a DSGE model with housing market spillovers

Xiaojin Sun and Kwok Ping Tsang

Economics Letters, 2014, vol. 125, issue 1, 47-51

Abstract: This paper studies the optimal interest rate rule in a DSGE model with housing market spillovers (Iacoviello and Neri, 2010). We find that the optimal rule responds to house price inflation even when the stabilization of house price is not among the objectives of the policymaker, and that the strength of the response depends crucially on a few structural parameters.

Keywords: Optimal interest rate rule; DSGE model; House price inflation (search for similar items in EconPapers)
JEL-codes: C68 E52 E58 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:125:y:2014:i:1:p:47-51

DOI: 10.1016/j.econlet.2014.07.030

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