EconPapers    
Economics at your fingertips  
 

Homeownership, informality and the transmission of monetary policy

Ceyhun Elgin and Burak Uras

Journal of Banking & Finance, 2014, vol. 49, issue C, 160-168

Abstract: Cross-country aggregate data exhibits a strong (positive) relationship between the size of the informal employment and aggregate homeownership rates. We investigate this empirical observation using a cash-in-advance model with housing markets and argue that the rate of inflation is important in explaining the nexus between informality and homeownership rates. Specifically, we uncover a novel monetary transmission mechanism and show that households with informal employment desire to economize on their short-term cash usage and avoid periodic rental payments when (i) informality is associated with constrained business investment finance, and (ii) inflation expectations are high. Our empirical and theoretical findings highlight an important interaction between the conduct of monetary policy and the performance of housing markets.

Keywords: Cash-in-advance; Informality; Cross-country data; Monetary transmission (search for similar items in EconPapers)
JEL-codes: E26 E41 E44 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426614003112
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Homeownership, Informality and the Transmission of Monetary Policy (2014) Downloads
Working Paper: Homeownership, Informality and the Transmission of Monetary Policy (2014) Downloads
Working Paper: Homeownership, informality and the transmission of monetary policy (2014) Downloads
Working Paper: Homeownership, Informality and the Transmission of Monetary Policy (2014) Downloads
Working Paper: Homeownership, Informality and the Transmission of Monetary Policy (2014) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:49:y:2014:i:c:p:160-168

DOI: 10.1016/j.jbankfin.2014.09.011

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-23
Handle: RePEc:eee:jbfina:v:49:y:2014:i:c:p:160-168