Real Estate Price Inflation, Monetary Policy, and Expectations in the United States and Japan

Hossein Samiei and Garry Schinasi ()

No 1994/012, IMF Working Papers from International Monetary Fund

Abstract: During the mid- to late 1980s, inflationary pressures were highly concentrated in asset markets in many industrial countries. This paper discusses why this may have occurred and then develops a forward-looking supply and demand model of the real estate market in which equilibrium prices depend on price expectations, monetary conditions, income, returns to alternative assets, and construction costs. In this model, the current equilibrium price is determined by expectations formed in different time periods by consumers and producers. The model and its more generalized dynamic specifications are estimated by maximum-likelihood methods. The empirical results do not reject the view that the relationship between real estate values and monetary policy was altered in 1980s.

Keywords: WP; real interest rate; monetary policy; property price; asset price inflation; user-cost model; construction cost; goods-price inflation; Real estate prices; Land prices; Inflation; Asset prices; Monetary base (search for similar items in EconPapers)
Pages: 50
Date: 1994-01-01
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1994/012

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