## Interest Rate Elasticity of Residential Housing Prices

_IMF Working Papers, October 1, 2008_

## Source details

**Canonical URL:** [Interest Rate Elasticity of Residential Housing Prices](https://www.imf.org/en/publications/wp/issues/2016/12/31/interest-rate-elasticity-of-residential-housing-prices-22378)

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## Bibliographic details
- Authors: Plamen K Iossifov, Martin Cihak, Amar Shanghavi
- Published: October 1, 2008
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451871050.001

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### Research question and scope
- Examines the interest rate elasticity of housing prices.
- Advances the empirical literature in two directions:
  - Uses a commonly used cross-country panel dataset and evaluates the housing price equation using a consistent estimator in the presence of endogenous explanatory variables and a lagged dependent variable.
  - Carries out a novel analysis of determinants of residential housing prices in a cross-section of countries.

### Key findings
- The short-term interest rate, and hence monetary policy, has a sizable impact on residential housing prices.

### Methodology highlights
- Cross-country panel dataset analysis with a consistent estimator that accounts for:
  - Endogenous explanatory variables.
  - A lagged dependent variable.
- Novel cross-sectional analysis of determinants of residential housing prices across countries.

### Subjects and keywords
- Subject: Housing, Housing prices, Mortgages, Real estate prices, Short term interest rates
- Keywords: elasticity, GDP, housing price, interest rate, price, quote, WP

### Implications
- Monetary policy, via short-term interest rates, can have a sizable influence on residential housing prices, implying that central bank interest-rate decisions are an important determinant of housing market dynamics.

*IMF Working Paper — Interest Rate Elasticity of Residential Housing Prices (Working Paper No. 2008/247), authors: Plamen K Iossifov, Martin Cihak, Amar Shanghavi.*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/interest-rate-elasticity-of-residential-housing-prices-22378_