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, . "House Prices and Monetary Policy in Colombia," Borradores de Economia 372, Banco de la Republica de Colombia.
- Martha López Piñeros, 2006. "House Prices and Monetary Policy in Colombia," BORRADORES DE ECONOMIA 002794, BANCO DE LA REPÚBLICA.
- 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
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