Asymmetric Effects of Monetary Policy in Regional Housing Markets
Knut Are Aastveit
André K. Anundsen
- American Economic Journal: Macroeconomics (Forthcoming)
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. The opposite holds true in supply inelastic areas.
We attribute this to asymmetric housing supply adjustments.
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