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Do expansionary and contractionary monetary policy have a symmetric impact on housing permits across the USA?

Author

Listed:
  • Mohsen Bahaman-Oskooee
  • Hesam Ghodsi
  • Muris Hadzic
  • Hardik Marfatia

Abstract

Purpose - The purpose of this paper is to assess the possibility of asymmetric impact of monetary policy on housing permits issued in each state of the USA. Design/methodology/approach - The methodology and approach are based on the linear ARDL and nonlinear ARDL approach to error-correction modeling and asymmetric cointegration. Findings - The linear models predict that money supply impact housing permits in 28 states in the short run and only nine states in the long run. However, the asymmetric effects are far more pervasive, highlighting the restrictive nature of the linear model. The results from the nonlinear model show at least one lag of positive and/or negative changes in money supply significantly impacts housing permits in nearly all states. Even in the long run, housing permits in 32 states share a long-run relationship with positive and/or negative changes in money supply. The authors also find contractionary monetary policy has a greater influence on housing permits in most states compared to expansionary policy. Originality/value - For the first time, the authors use state-level data and asymmetric approach to assess the impact of monetary policy on house permits issued in each state of the USA.

Suggested Citation

  • Mohsen Bahaman-Oskooee & Hesam Ghodsi & Muris Hadzic & Hardik Marfatia, 2023. "Do expansionary and contractionary monetary policy have a symmetric impact on housing permits across the USA?," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 17(4), pages 1034-1049, April.
    • Handle: RePEc:eme:ijhmap:ijhma-12-2022-0181
    DOI: 10.1108/IJHMA-12-2022-0181
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    More about this item

    Keywords

    Money supply; Housing market; Nonlinear ARDL approach; Asymmetry; State-level data; House permits; The USA; R13;
    All these keywords.

    JEL classification:

    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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