House Prices, Credit and Willingness to Lend
AbstractThis paper establishes a Tobinâs q model in which house prices fluctuate around their long run equilibrium due to fluctuations in credit availability and income. It is shown that house prices are positively related to credit in the short run, however, negatively related to the availability of credit in the long run. Using survey data on banksâ willingness to lend and data on disintermediation for the U.S. over a long period and for nine OECD countries over a short period it is shown that the availability of credit is the principal variable driving house prices around their long run equilibrium. Shocks to interest rates and income have only secondary effects on house price fluctuations.
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Bibliographic InfoArticle provided by The Economic Society of Australia in its journal The Economic Record.
Volume (Year): 87 (2011)
Issue (Month): 279 (December)
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Other versions of this item:
- Sarah J. Carrington & Jakob B. Madsen, 2011. "House Prices, Credit And Willingness To Lend," Economics Series 2011_3, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
- Sarah J. Carrington & Jakob B. Madsen, 2009. "House Prices, Credit and Willingness to Lend," Development Research Unit Working Paper Series 23-09, Monash University, Department of Economics.
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
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