The Drivers of Housing Cycles in Spain
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Summary:
Since Spain joined the EMU, two main important factors behind the housing boom appear to be the decrease of nominal interest rates and demographic factors. In this paper we estimate a New Keynesian model of a currency area, using data for Spain and the rest of the EMU to study the importance of those factors. We also examine the role of different rigidities and find that labor market frictions are crucial to explain main features of the data. On the other hand, financial frictions that impose a collateral constraint on borrowing do not appear to be relevant.
Series:
Working Paper No. 2009/203
Subject:
Consumption Housing Housing prices Labor National accounts Prices Return on investment
English
Publication Date:
September 1, 2009
ISBN/ISSN:
9781451873504/1018-5941
Stock No:
WPIEA2009203
Pages:
39
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