 The Interaction between Macroprudential and Monetary Policies and the Housing Market – A VAR Examination for IsraelNo 2023.11, Bank of Israel Working Papers from Bank of Israel Abstract: We examine the interaction between housing-market macroprudential (MaP) measures, monetary policy, and housing market dynamics in Israel. Using a structural VAR, we show that monetary policy and MaP policy react to positive shocks to house prices and to the volume of transactions in the housing market, acting as complementary policies, but do not react to changes in the levels of mortgage debt. We find that MaP measures are tigghtened in response to negative (accomodative) monetary policy shocks, offsetting their effect, while monetary policy only weakly reacts to shocks to MaP measures. Similar to the findings in previous research, contractionary monetary policy and MaP measures tend to mitigate the increase in house prices. Transaction volume declines in response to monetary tightening, and is also reduced in response to MaP measures, after a temporary increase. While monetary policy does not significantly change housing debt, MaP measures do have a mitigating effect on debt after a few periods. Our results are robust to alternative specifications. Pages: 32 pages Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:boi:wpaper:2023.11 Access Statistics for this paper More papers in Bank of Israel Working Papers from Bank of Israel Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.