Interest Rate Elasticity of Residential Housing Prices

Download or read book Interest Rate Elasticity of Residential Housing Prices written by Mr.Martin Cihak and published by International Monetary Fund. This book was released on 2008-10-01 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the interest rate elasticity of housing prices, advancingthe empirical literature in two directions. First, we take a commonly used cross-country panel dataset and evaluate the housing price equation using a consistent estimator in the presence of endogenous explanatory variables and a lagged dependent variable. Second, we carry-out a novel analysis of determinants of residential housing prices in a cross-section of countries. Our results show that the short-term interest rate, and hence monetary policy, has a sizable impact on residential housing prices.