House prices and monetary policy

Brito, Paulo; Marini, Giancarlo; Piergallin, Alessandro

http://hdl.handle.net/10400.5/30490

Use this identifier to reference this record.

Name:	Description:	Size:	Format:
MPRA_paper_89577.2016.pdf		663.65 KB	Adobe PDF	Download

Send Feedback

Authors

Brito, Paulo

Marini, Giancarlo

Piergallin, Alessandro

Abstract(s)

This paper analyzes global dynamics in an overlapping generations general equilibrium model with housing-wealth effects. It demonstrates that monetary policy cannot burst rational bubbles in the housing market. Under monetary policy rules of the Taylor-type, there exist global self-fulfilling paths of house prices along a heteroclinic orbit connecting multiple equilibria. From bifurcation analysis, the orbit features a boom (bust) in house prices when monetary policy is more (less) active. The paper also proves that booms or busts cannot be ruled out by interest-rate feedback rules responding to both inflation and house prices

Keywords

House Prices Housing-Wealth Effects Monetary Policy Rules Equilibrium Dynamics Global Determinacy Heteroclinic Orbits

URI

http://hdl.handle.net/10400.5/30490

Citation

Brito, Paulo; Giancarlo Marin and Alessandro Piergallini .(2016). “House prices and monetary policy”, MPRA - Working Paper No. 89577. 2016 .(Search PDF in 2024).