Brito, PauloMarini, GiancarloPiergallini, Alessandro2024-03-272024-03-272016Brito, Paulo; Giancarlo Marini and Alessandro Piergallini .(2016). “House prices and monetary policy “, Studies in Nonlinear Dynamics & Econometrics, Volume 20, No. 3: pp. 251–277. DE GRYTER. (Search PDF in 2024).1558-3708http://hdl.handle.net/10400.5/30489This 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.engEquilibrium DynamicsGlobal DeterminacyHeteroclinic OrbitsHouse PricesHousing-Wealth EffectsMonetary Policy Rulesjournal articleDOI 10.1515/snde-2014-0072