Housing in Banks’ Portfolio and its Effects on Monetary Policy in Iran

Hossein Tavakolian (), Habib Morovat () and Diar Baheri Rad ()
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Hossein Tavakolian : Allameh Tabataba'i University
Habib Morovat : Allameh Tabataba'i University
Diar Baheri Rad : Allameh Tabataba'i University

Journal of Money and Economy, 2019, vol. 14, issue 3, 277-315

Abstract: The recent housing market experience has led many to concern that the developments in the housing sector are not just a passive reflection of macroeconomic activities but instead might be one of the driving forces of them. In this context, it is crucial to understand the nature of the economy by considering the housing market and build a suitable monetary policy. In this paper, using Bayesian methods, we develop and estimate a DSGE model for Iran from 1988q1 to 2017q4, which explicitly models the housing in the banks’ portfolio to study the macroeconomic effects of monetary authority’s reaction to the housing price inflation. Our findings indicate that this reaction amplifies all the implications of the structural shocks.

Keywords: Monetary Policy; Taylor Rule; Housing; DSGE; Bayesian Estimation (search for similar items in EconPapers)
JEL-codes: E32 E52 R31 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:mbr:jmonec:v:14:y:2019:i:3:p:277-315

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