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Credit, House Prices and the Macroeconomy in Cyprus

Author

Listed:
  • Lena T. Cleanthous

    (Central Bank of Cyprus)

  • Elena C. Eracleous

    (University of Cyprus)

  • Nektarios A. Michail

    (Central Bank of Cyprus)

Abstract

This paper examines whether there is a link between house prices, credit and macroeconomic conditions in Cyprus, using a vector error correction model (VECM) and quarterly data from 2005Q4 to 2016Q4. Overall, the results suggest that a link does exist and that house prices have a bi-directional relationship with loans and unemployment rates. Macroeconomic conditions matter for Cyprus economy as an unexpected shock in unemployment has been found to have a persistent impact on all model variables. Interest rates have also been found to have an effect on wages and house prices.

Suggested Citation

  • Lena T. Cleanthous & Elena C. Eracleous & Nektarios A. Michail, 2019. "Credit, House Prices and the Macroeconomy in Cyprus," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 17(1), pages 33-55.
    • Handle: RePEc:seb:journl:v:17:y:2019:i:1:p:33-55
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Kyriaki G. Louka & Nektarios A. Michail, 2022. "Missed Payments, Renegotiations, and Household Consumption," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 20(1), pages 31-50.
    2. Nektarios A. Michail & Christos S. Savva, 2021. "Public Debt Thresholds: An Analysis for Cyprus," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 15(1), pages 75-85, June.
    3. Benjamin Kwakye & Chan Tze Haw, 2020. "Interplay of the Macroeconomy and Real Estate: Systematic Review of Literature," International Journal of Economics and Financial Issues, Econjournals, vol. 10(5), pages 262-271.
    4. Nektarios A. Michail & George Thucydides, 2018. "Does Housing Wealth Affect Consumption? The Case of Cyprus," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 12(2), pages 67-86, December.
    5. Christos S. Savva & Nektarios A. Michail, 2020. "What Determines Bank Lending Standards in Cyprus?," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 14(1), pages 16-26, June.
    6. Demetris Koursaros & Nektarios Michail & Niki Papadopoulou & Christos Savva, 2018. "To Create or to Redistribute? That is the Question," Working Papers 2018-4, Central Bank of Cyprus.
    7. Nektarios A. Michail & Ioanna Evangelou & Rozmari Hadjicharalambous, 2020. "Income and Wealth Inequality in Cyprus: Empirical evidence from the Household Finance and Consumption Survey," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 14(2), pages 50-60, December.
    8. Nektarios A. Michail & Christos S. Savva, 2021. "Electricity consumption and economic activity in Cyprus using an asymmetric cointegration technique," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 15(2), pages 26-41, December.

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    More about this item

    Keywords

    Credit; House Prices; VECM; Cyprus;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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