Asymmetric Effects of Monetary Policy in Regional Housing Markets
- (pp. 499-529)
Abstract
The responsiveness of house prices to monetary policy shocks depends on the nature of the shock—expansionary versus contractionary—and on local housing supply elasticities. These findings are established using a panel of 263 US metropolitan areas. Expansionary monetary policy shocks have a larger impact on house prices in supply-inelastic areas. Contractionary shocks are orthogonal to housing supply elasticities. In supply-elastic areas, contractionary shocks have a greater impact on house prices than expansionary shocks do. The opposite holds true in supply-inelastic areas. We attribute this to asymmetric housing supply adjustments.Citation
Aastveit, Knut Are, and André K. Anundsen. 2022. "Asymmetric Effects of Monetary Policy in Regional Housing Markets." American Economic Journal: Macroeconomics, 14 (4): 499-529. DOI: 10.1257/mac.20190011Additional Materials
JEL Classification
- E32 Business Fluctuations; Cycles
- E43 Interest Rates: Determination, Term Structure, and Effects
- E52 Monetary Policy
- R21 Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
- R31 Housing Supply and Markets
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