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Money Demand and House Prices in Korea (in Korean)

Author

Listed:
  • Byoung Hark Yoo

    (Institute for Monetary and Economic Research, The Bank of Korea)

Abstract

This paper proposes a new money demand function in a New Keynesian DSGE model where money demand depends not only on output and interest rates but also on house prices. The basic idea of the model is that money is demanded for transactions both of goods and of assets. The empirical results in this paper show that moves in house prices have considerably affected the variations in monetary aggregates in Korea since 1999. The results also imply that the recent increase in house prices was part of the reason why monetary growth did not decrease even though the Bank of Korea has increased its target interest rate several times since October 2005.

Suggested Citation

  • Byoung Hark Yoo, 2007. "Money Demand and House Prices in Korea (in Korean)," Economic Analysis (Quarterly), Economic Research Institute, Bank of Korea, vol. 13(4), pages 39-63, December.
    • Handle: RePEc:bok:journl:v:13:y:2007:i:4:p:39-63
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    File URL: http://imer.bok.or.kr/attach/imer_kor/2545/2013/12/1386572519931.pdf
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    Cited by:

    1. Yugang He & Yinhui Wang, 2022. "Macroeconomic Effects of COVID-19 Pandemic: Fresh Evidence from Korea," Sustainability, MDPI, vol. 14(9), pages 1-14, April.

    More about this item

    Keywords

    Money Demand; House Prices; New Keynesian DSGE Model;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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