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The housing price boom of the late 1990s: Did inflation targeting matter?

Sébastien Frappa and Jean-Stéphane Mésonnier ()

Journal of Financial Stability, 2010, vol. 6, issue 4, 243-254

Abstract: The recent boom in the housing markets of most developed economies has spurred criticism that inflation targeting central banks may have neglected the build-up of financial imbalances. This paper provides a formal empirical test of such claims, using a standard program evaluation methodology to control for a possible bias due to self-selection into inflation targeting. We consider 17 industrial economies over the period 1980-2007, among which nine countries have targeted inflation at some point. We find robust evidence of a significant positive effect of inflation targeting on real house price growth and on the house price-to-rent ratio.

Keywords: Inflation; targeting; Housing; prices; Treatment; effect; OECD; countries (search for similar items in EconPapers)
Date: 2010
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