The Drivers of Housing Cycles in Spain

Pau Rabanal and Oriol Aspachs-Bracons

No 2009/203, IMF Working Papers from International Monetary Fund

Abstract: Since Spain joined the EMU, two main important factors behind the housing boom appear to be the decrease of nominal interest rates and demographic factors. In this paper we estimate a New Keynesian model of a currency area, using data for Spain and the rest of the EMU to study the importance of those factors. We also examine the role of different rigidities and find that labor market frictions are crucial to explain main features of the data. On the other hand, financial frictions that impose a collateral constraint on borrowing do not appear to be relevant.

Keywords: WP; durable goods; technology shock; consumption goods; price level; monetary policy shock; investment adjustment cost; preference shock; utility function; nondurable goods; Consumption; Housing; Housing prices; Return on investment; Europe (search for similar items in EconPapers)
Pages: 39
Date: 2009-09-01
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Citations: View citations in EconPapers (18)

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Related works:
Journal Article: The drivers of housing cycles in Spain (2010)
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