House Prices and Monetary Policy in Colombia
AbstractThis paper investigates the possible responses of an inflation-targeting monetary policy in the face of asset price deviations from fundamental values. Focusing on the housing sector of the Colombian economy, we consider a general equilibrium model with frictions in credit market and bubbles in housing prices. We show that monetary policy is less efficient when it responds directly to asset price of housing than a policy that reacts only to deviations of expected inflation (CPI) from target. Some prudential regulation may provide a better outcome in terms of output and inflation variability.
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Bibliographic InfoArticle provided by BANCO DE LA REPÚBLICA - ESPE in its journal ENSAYOS SOBRE POLÍTICA ECONÓMICA.
Volume (Year): (2006)
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Other versions of this item:
- Martha López, 2005. "House Prices and Monetary Policy in Colombia," Working Papers Central Bank of Chile 349, Central Bank of Chile.
- Martha López Piñeros, 2006. "House Prices and Monetary Policy in Colombia," BORRADORES DE ECONOMIA 002794, BANCO DE LA REPÚBLICA.
- Martha López, . "House Prices and Monetary Policy in Colombia," Borradores de Economia 372, Banco de la Republica de Colombia.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
- E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Aoki, Kosuke & James Proudman & Gertjan Vlieghe, 2003.
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- Jack Selody & Carolyn Wilkins, 2004. "Asset Prices and Monetary Policy: A Canadian Perspective on the Issues," Bank of Canada Review, Bank of Canada, vol. 2004(Autumn), pages 3-14.
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Wiley Blackwell, vol. 5(2), pages 139-64, Summer.
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6543, National Bureau of Economic Research, Inc.
- Mauricio Cardenas & Alejandro Badel, 2003. "La crisis de financiamiento hipotecario en Colombia: Causas y consecuencias," Research Department Publications 4355, Inter-American Development Bank, Research Department.
- Javier Gómez & José Darío Uribe & Hernando Vargas, 2002. "The Implementation Of Inflation Targeting In Colombia," BORRADORES DE ECONOMIA 003603, BANCO DE LA REPÚBLICA.
- Richard Dennis, 2000. "Optimal simple targeting rules for small open economies," Working Papers in Applied Economic Theory 2000-20, Federal Reserve Bank of San Francisco.
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