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The role of housing market in the effectiveness of monetary policy over the Covid-19 era

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  • Apergis, Nicholas

Abstract

The efficiency of monetary policy substantially depends on the phase of the housing cycle since house prices are important determinants of banks’ willingness to lend. This paper presents evidence on 31 countries which shows that over the pandemic Covid-19 period, in a regime of a strong housing market, the effects of a monetary expansion are smaller than in a regime of low house prices. The findings are important for central banks which have implemented easing monetary policies responding to the Covid-19 pandemic.

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  • Apergis, Nicholas, 2021. "The role of housing market in the effectiveness of monetary policy over the Covid-19 era," Economics Letters, Elsevier, vol. 200(C).
    • Handle: RePEc:eee:ecolet:v:200:y:2021:i:c:s0165176521000264
    DOI: 10.1016/j.econlet.2021.109749
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    References listed on IDEAS

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    1. Kristina Bluwstein & Michał Brzoza‐Brzezina & Paolo Gelain & Marcin Kolasa, 2020. "Multiperiod Loans, Occasionally Binding Constraints, and Monetary Policy: A Quantitative Evaluation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(7), pages 1691-1718, October.
    2. Alessandro Calza & Tommaso Monacelli & Livio Stracca, 2013. "Housing Finance And Monetary Policy," Journal of the European Economic Association, European Economic Association, vol. 11, pages 101-122, January.
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    4. Matteo Iacoviello & Stefano Neri, 2010. "Housing Market Spillovers: Evidence from an Estimated DSGE Model," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 125-164, April.
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    Cited by:

    1. Rebecca Tunstall, 2023. "An empirical test of measures of housing degrowth: Learning from the limited experience of England and Wales, 1981–2011," Urban Studies, Urban Studies Journal Limited, vol. 60(7), pages 1285-1303, May.
    2. Müller, Fernanda Maria & Santos, Samuel Solgon & Righi, Marcelo Brutti, 2023. "A description of the COVID-19 outbreak role in financial risk forecasting," The North American Journal of Economics and Finance, Elsevier, vol. 66(C).
    3. Anna Dubinova & Andre Lucas & Sean Telg, 2021. "COVID-19, Credit Risk and Macro Fundamentals," Tinbergen Institute Discussion Papers 21-059/III, Tinbergen Institute.
    4. Arturas Kaklauskas & Edmundas Kazimieras Zavadskas & Natalija Lepkova & Saulius Raslanas & Kestutis Dauksys & Ingrida Vetloviene & Ieva Ubarte, 2021. "Sustainable Construction Investment, Real Estate Development, and COVID-19: A Review of Literature in the Field," Sustainability, MDPI, vol. 13(13), pages 1-42, July.
    5. Ka Shing Cheung & Chung Yim Yiu & Chuyi Xiong, 2021. "Housing Market in the Time of Pandemic: A Price Gradient Analysis from the COVID-19 Epicentre in China," JRFM, MDPI, vol. 14(3), pages 1-17, March.

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    More about this item

    Keywords

    Monetary policy; House price regimes; Pandemic crisis; Non-linear panel model;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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