The Drivers of Housing Cycles in Spain

Author/Editor: Aspachs-Bracons, Oriol ; Rabanal, Pau
Publication Date: September 01, 2009
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.
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 )
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