Central banks and house prices in the run-up to the crisis

David Cobham

No 2012-45, SIRE Discussion Papers from Scottish Institute for Research in Economics (SIRE)

Abstract: The financial crisis and the role played within it by fluctuations in house prices has reopened the debate about whether monetary policy should respond to asset prices. This paper investigates how the central banks of the euro area, the UK and the US considered, understood and responded to the trends in house prices in the six or seven years preceding the crisis, and how they have analysed those developments since the crisis. It suggests that these central banks, particularly the Anglo-Saxon ones, might have been able to take some useful action if they had devoted more intellectual resources to analysing the possible misalignments of house prices and been willing to act on them.

Keywords: monetary policy; house prices; asset prices; leaning against the wind; Lucas Critique (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Central banks and house prices in the run-up to the crisis (2013)
Working Paper: Central banks and house prices in the run-up to the crisis (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:sirdps:399

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