How to deal with real estate booms: Lessons from country experiences

Christopher Crowe, Dell’Ariccia, Giovanni, Deniz Igan and Pau Rabanal
Authors registered in the RePEc Author Service: Giovanni Dell'ariccia

Journal of Financial Stability, 2013, vol. 9, issue 3, 300-319

Abstract: The financial crisis showed, once again, that neglecting real estate booms can have disastrous consequences. In this paper, we spell out the circumstances under which a more active policy agenda on this front would be justified. Then, we offer insights on the pros and cons as well as implementation challenges of various policy tools that can be used to contain the damage to the financial system and the economy from real estate boom–bust episodes. These insights derive from econometric analysis, when possible, and case studies of country experiences. Broadly, booms financed through credit and involving leverage are more likely to warrant a policy response. In that context, macroprudential measures can be targeted more precisely to specific sources of risk, but they may prove ineffective because of circumvention. In that case, monetary policy may have to be used to lean against the wind.

Keywords: Real estate; Boom–bust dynamics; Macroeconomic policy; Macroprudential regulation (search for similar items in EconPapers)
JEL-codes: E30 E44 E58 G28 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (193)

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Working Paper: How to Deal with Real Estate Booms: Lessons from Country Experiences (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:9:y:2013:i:3:p:300-319

DOI: 10.1016/j.jfs.2013.05.003

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