## The Drivers of Housing Cycles in Spain

_IMF Working Papers, September 1, 2009_

## Source details

**Canonical URL:** [The Drivers of Housing Cycles in Spain](https://www.imf.org/en/publications/wp/issues/2016/12/31/the-drivers-of-housing-cycles-in-spain-23261)

## Other formats

- [Markdown version](/en/publications/wp/issues/2016/12/31/the-drivers-of-housing-cycles-in-spain-23261/index.md)
- [Structured JSON version](/en/publications/wp/issues/2016/12/31/the-drivers-of-housing-cycles-in-spain-23261/index.json)
- [Bundle manifest](/en/publications/wp/issues/2016/12/31/the-drivers-of-housing-cycles-in-spain-23261/bundle-manifest.json)

## Bibliographic details
- Authors: Pau Rabanal, Oriol Aspachs-Bracons
- Published: September 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451873504.001

---

### 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.
- The paper estimates 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.
- The role of different rigidities is examined; labor market frictions are identified as crucial to explain main features of the data, while financial frictions that impose a collateral constraint on borrowing do not appear to be relevant.

### Methodology
- Model: New Keynesian model of a currency area.
- Data: Spain and the rest of the EMU.
- Focus: Assess importance of decreased nominal interest rates and demographic factors for the housing boom; evaluate different rigidities including labor market frictions and financial (collateral) constraints.

### Key Findings
- Decrease of nominal interest rates: Listed as one of the two main important factors behind the housing boom since Spain joined the EMU.
- Demographic factors: Listed as the other main important factor behind the housing boom since Spain joined the EMU.
- Labor market frictions: Crucial to explain main features of the data.
- Financial frictions (collateral constraints on borrowing): Do not appear to be relevant.

### Subject Areas and Keywords
- Subject: Consumption, Housing, Housing prices, Labor, National accounts, Prices, Return on investment
- Keywords: Consumption, consumption goods, durable goods, Europe, Housing, Housing prices, investment adjustment cost, monetary policy shock, nondurable goods, preference shock, price level, Return on investment, technology shock, utility function, WP

---

## Content in this bundle

- **_wp09203**
  - [_wp09203 (Markdown version)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2009/_wp09203.pdf.md){rel="alternate" type="text/markdown"}
  - [_wp09203 (PDF)](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/wp/2009/_wp09203.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/the-drivers-of-housing-cycles-in-spain-23261_