The Drivers of Housing Cycles in Spain

Author/Editor: Aspachs-Bracons, Oriol ; Rabanal, Pau
Publication Date: September 01, 2009
Electronic Access: Free Full text (PDF file size is 897KB).
Use the free Adobe Acrobat Reader to view this PDF file

Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
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. 09/203
Subject(s): Cross country analysis | Demand | Economic models | European Union | Household credit | Housing | Housing prices | Labor markets | Monetary policy | Private consumption | Private investment | Private savings | Private sector | Spain

Author's Keyword(s): Housing | Monetary Policy | Financial Constraints
Publication Date: September 01, 2009
Format: Paper
Stock No: WPIEA2009203 Pages: 39
US$18.00 (Academic Rate:
US$18.00 )
Please address any questions about this title to