House prices, consumption, and monetary policy: a financial accelerator approach

Kosuke Aoki, James Proudman and Gertjan Vlieghe

No 7, Royal Economic Society Annual Conference 2003 from Royal Economic Society

Abstract: We consider a general equilibrium model where asymmetric information problems create frictions in credit markets used by households. In our economy, houses serve as collateral to lower the agency costs related to borrowing. We show that this amplifies the effect of monetary policy shocks on housing investment, house prices and consumption. We consider the effect of a structural change in credit markets that lowers the transaction costs of additional borrowing against housing equity. We show that such a change would increase the effect of monetary policy shocks on consumption, but would decrease the effect on house prices and housing investment.

Keywords: house prices; credit frictions; monetary policy; financial accelerator; consumption (search for similar items in EconPapers)
JEL-codes: E32 E50 R21 (search for similar items in EconPapers)
Date: 2003-06-04
New Economics Papers: this item is included in nep-geo, nep-mon and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://repec.org/res2003/Aoki.pdf full text

Related works:
Journal Article: House prices, consumption, and monetary policy: a financial accelerator approach (2004)
Working Paper: House prices, consumption, and monetary policy: a financial accelerator approach (2002)
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:ecj:ac2003:7

Access Statistics for this paper

More papers in Royal Economic Society Annual Conference 2003 from Royal Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Christopher F. Baum ().