Interest Rate Elasticity of Residential Housing Prices

Author/Editor:

Plamen K Iossifov ; Martin Cihak ; Amar Shanghavi

Publication Date:

October 1, 2008

Electronic Access:

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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:

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.

Series:

Working Paper No. 08/247

Subject:

English

Publication Date:

October 1, 2008

ISBN/ISSN:

9781451871050/1018-5941

Stock No:

WPIEA2008247

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

32

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