IS THERE A STABLE RELATIONSHIP BETWEEN REAL INTEREST RATES AND HOUSING PRICES? EVIDENCE FROM SEVERAL EURO AREA COUNTRIES

José Sánchez-Santos () and José Pablo ABEAL Vázquez ()
Additional contact information
José Pablo ABEAL Vázquez: Department of Applied Economics, University of A Coruña, Spain

The Annals of the "Stefan cel Mare" University of Suceava. Fascicle of The Faculty of Economics and Public Administration, 2011, vol. 11, issue 2(14), 46-55

Abstract: This paper analyzes the relationship between real interest rates and housing prices in three European Union countries (France, Spain and the Netherlands) between 1999 and 2010. The main objective is to test whether there is a stable long-run relationship between both variables, as well as whether there are differences across countries. In order to do so, I use different real interest rates (short-term and long-term) and different housing price indices (nominal and real), and apply cointegration techniques and propose an error correction model, following the two-stage methodology suggested by Engle and Granger, in order to examine the different dynamics in the short and the long term. The main conclusion is that the relationship between real interest rates and housing prices is weak, although there are differences across countries. This has some implications for the single monetary policy conducted by the European Central Bank.

Keywords: Housing price; monetary policy; interest rate; monetary union; cointegration; error correction model (search for similar items in EconPapers)
Date: 2011
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.seap.usv.ro/annals/arhiva/USVAEPA_VOL.11,NR.2(14),2011_fulltext.pdf (application/pdf)

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:scm:ausvfe:v:11:y:2011:i:2(14):p:46-55

Access Statistics for this article

The Annals of the "Stefan cel Mare" University of Suceava. Fascicle of The Faculty of Economics and Public Administration is currently edited by Editura Universitatii Stefan cel Mare din Suceava

More articles in The Annals of the "Stefan cel Mare" University of Suceava. Fascicle of The Faculty of Economics and Public Administration from "Stefan cel Mare" University of Suceava, Romania, Faculty of Economics and Public Administration Contact information at EDIRC.
Bibliographic data for series maintained by Liviu Scutariu ().