EconPapers    
Economics at your fingertips  
 

Impact of monetary policy on house prices: case of Pakistan

Muhammad Umar, Moin Akhtar, Muhammad Shafiq and Zia-Ur-Rehman Rao

International Journal of Housing Markets and Analysis, 2019, vol. 13, issue 3, 503-512

Abstract: Purpose - This study aims to explore the impact of monetary policy on house prices in Pakistan. Design/methodology/approach - This study uses monthly time-series data of house prices, monetary policy, inflation and stock market index ranging from January 2011 to December 2016. All the series were checked for stationarity by using augmented Dickey–Fuller test, and lag length of 11 was decided on the basis of Schwert’z rule of thumb. Vector autoregressive (VAR) model was used because the series were not co-integrated. Findings - The analysis revealed that monetary policy significantly affects house prices in Pakistan. Tight monetary policy results in lower house prices and vice versa. The relationship between monetary policy and house prices is unidirectional. The study also finds that higher inflation also leads to soaring house prices, but the variation in stock market index does not affect house prices. Originality/value - To the best of authors’ knowledge, none of the existing studies explores the impact of monetary policy on house prices in Pakistan. The findings help investors and policy makers to understand the relationship between monetary policy and house prices to make better decisions.

Keywords: Pakistan; Monetary policy; Interest rates; Inflation; House prices; Stock market index; VAR (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.emeraldinsight.com/10.1108/IJHMA-12-201 ... RePEc&WT.mc_id=RePEc (text/html)
Access to full text is restricted to subscribers

Related works:
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:eme:ijhmap:ijhma-12-2017-0106

Ordering information: This journal article can be ordered from
Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
http://www.emeraldgrouppublishing.com/JPIF.htm

Access Statistics for this article

International Journal of Housing Markets and Analysis is currently edited by Professor Richard Reed

More articles in International Journal of Housing Markets and Analysis from Emerald Group Publishing
Bibliographic data for series maintained by Jade Turvey ().

 
Page updated 2021-07-10
Handle: RePEc:eme:ijhmap:ijhma-12-2017-0106