The regional impact of monetary policy on house prices

Larry Allen, George N. Kenyon and Vivek S. Natarajan

International Journal of Business Innovation and Research, 2012, vol. 6, issue 4, 391-400

Abstract: This paper examines how house prices respond to monetary policy in the nine census regions of the USA. A polynomial distributed lag regression model is estimated for each region. The dependent variable in each equation includes growth for the index of regional house prices. The independent variables include: (1) growth for an index of national house prices; (2) difference between the regional unemployment rate and the national unemployment; (3) the growth in M2. The money stock variable enters each equation as a polynomial distributed lag. Given this specification, regional house prices are positively correlated with money stock growth in some regions, and negatively correlated in others.

Keywords: monetary policies; housing; demographics; regional economics; USA; United States; census regions; censuses; speculative bubbles; speculation; subprime crisis; home equity; interest rates; regional unemployment; house prices; regional impacts; polynomial distributed models; lag regression models; polynomial distribution; dependent variables; price indexes; unemployment rates; national unemployment; M2; economics; economic classifications; economic conditions; monetary conditions; economic indicators; economic forecasts; inflation; currency circulation; money stocks; stock variables; positive correlations; negative correlations; stock growth; business innovation; business research. (search for similar items in EconPapers)
Date: 2012
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