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Housing in Banks’ Portfolio and its Effects on Monetary Policy in Iran

Author

Listed:
  • Tavakolian , Hossein

    (Allameh Tabataba'i University)

  • Morovat , Habib

    (Allameh Tabataba'i University)

  • Baheri Rad , Diar

    (Allameh Tabataba'i University)

Abstract

The recent housing market experience has led many to concern that the developments in the housing sector are not just a passive reflection of macroeconomic activities but instead might be one of the driving forces of them. In this context, it is crucial to understand the nature of the economy by considering the housing market and build a suitable monetary policy. In this paper, using Bayesian methods, we develop and estimate a DSGE model for Iran from 1988q1 to 2017q4, which explicitly models the housing in the banks’ portfolio to study the macroeconomic effects of monetary authority’s reaction to the housing price inflation. Our findings indicate that this reaction amplifies all the implications of the structural shocks.

Suggested Citation

  • Tavakolian , Hossein & Morovat , Habib & Baheri Rad , Diar, 2019. "Housing in Banks’ Portfolio and its Effects on Monetary Policy in Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 14(3), pages 277-315, July.
    • Handle: RePEc:mbr:jmonec:v:14:y:2019:i:3:p:277-315
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Monetary Policy; Taylor Rule; Housing; DSGE; Bayesian Estimation;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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