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Learning about monetary policy rules when the housing market matters

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  • Xiao, Wei
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Abstract

In this paper we study a general equilibrium model with a housing market, and use stability under adaptive learning as a criterion to evaluate monetary policy rules. An important feature of the model is that there exist credit-constrained borrowers who use their housing assets as collateral to finance purchases. We evaluate both conventional Taylor rules and rules that incorporate other targets such as housing prices. We find that the effect of responding to housing prices, in addition to output and inflation, depends critically on the assumed information structure of the economy.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 37 (2013)
Issue (Month): 3 ()
Pages: 500-515

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Handle: RePEc:eee:dyncon:v:37:y:2013:i:3:p:500-515

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Web page: http://www.elsevier.com/locate/jedc

Related research

Keywords: Adaptive learning; Taylor rule; Housing market; Credit channel; Monetary policy;

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