The housing price boom of the late 1990s: Did inflation targeting matter?
AbstractThe recent boom in the housing markets of most developed economies has spurred criticism that inflation targeting central banks may have neglected the build-up of financial imbalances. This paper provides a formal empirical test of such claims, using a standard program evaluation methodology to control for a possible bias due to self-selection into inflation targeting. We consider 17 industrial economies over the period 1980-2007, among which nine countries have targeted inflation at some point. We find robust evidence of a significant positive effect of inflation targeting on real house price growth and on the house price-to-rent ratio.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Financial Stability.
Volume (Year): 6 (2010)
Issue (Month): 4 (December)
Contact details of provider:
Web page: http://www.elsevier.com/locate/jfstabil
Inflation targeting Housing prices Treatment effect OECD countries;
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.:
- Torsten Persson, 2001. "Currency unions and trade: how large is the treatment effect?," Economic Policy, CEPR & CES & MSH, vol. 16(33), pages 433-462, October.
- Claudio Borio & William English & Andrew Filardo, 2003.
"A tale of two perspectives: old or new challenges for monetary policy?,"
BIS Papers chapters,
in: Bank for International Settlements (ed.), Monetary policy in a changing environment, volume 19, pages 1-59
Bank for International Settlements.
- Claudio E. V. Borio & Wiliam English & Andrew Filardo, 2003. "A tale of two perspectives: old or new challenges for monetary policy?," BIS Working Papers 127, Bank for International Settlements.
- Marco Terrones & M. Ayhan Kose & Stijn Claessens, 2008.
"What Happens During Recessions, Crunches, and Busts?,"
IMF Working Papers
08/274, International Monetary Fund.
- Stijn Claessens & M. Ayhan Kose & Marco E. Terrones, 2009. "What happens during recessions, crunches and busts?," Economic Policy, CEPR & CES & MSH, vol. 24, pages 653-700, October.
- Claessens, Stijn & Kose, Ayhan & Terrones, Marco E., 2008. "What Happens During Recessions, Crunches and Busts?," CEPR Discussion Papers 7085, C.E.P.R. Discussion Papers.
- Calza, Alessandro & Stracca, Livio & Monacelli, Tommaso, 2009.
"Housing finance and monetary policy,"
Working Paper Series
1069, European Central Bank.
- Bjørnland, Hilde C. & Jacobsen, Dag Henning, 2010.
"The role of house prices in the monetary policy transmission mechanism in small open economies,"
Journal of Financial Stability,
Elsevier, vol. 6(4), pages 218-229, December.
- Hilde C. Bjørnland & Dag Henning Jacobsen, 2009. "The role of house prices in the monetary policy transmission mechanism in small open economies," Working Paper 2009/06, Norges Bank.
- Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 1999.
"A new database on financial development and structure,"
Policy Research Working Paper Series
2146, The World Bank.
- Beck, T.H.L. & Demirgüç-Kunt, A. & Levine, R., 2000. "A new database on financial development and structure," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125518, Tilburg University.
- Frederic S. Mishkin, 2004. "Can Inflation Targeting Work in Emerging Market Countries?," NBER Working Papers 10646, National Bureau of Economic Research, Inc.
- Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Wiley Blackwell, vol. 65(2), pages 261-94, April.
- Assenmacher-Wesche, Katrin & Gerlach, Stefan, 2008.
"Ensuring Financial Stability: Financial Structure and the Impact of Monetary Policy on Asset Prices,"
CEPR Discussion Papers
6773, C.E.P.R. Discussion Papers.
- Katrin Assenmacher-Wesche & Stefan Gerlach, 2008. "Ensuring financial stability: financial structure and the impact of monetary policy on asset prices," IEW - Working Papers 361, Institute for Empirical Research in Economics - University of Zurich.
- M. H. Khalil Timamy, 2005. "Debate," Review of African Political Economy, Taylor & Francis Journals, vol. 32(104-105), pages 383-393, June.
- Jeffrey M Wooldridge, 2010.
"Econometric Analysis of Cross Section and Panel Data,"
MIT Press Books,
The MIT Press,
edition 2, volume 1, number 0262232588, January.
- Jeffrey M. Wooldridge, 2001. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262232197, January.
- Lin, Shu & Ye, Haichun, 2007. "Does inflation targeting really make a difference? Evaluating the treatment effect of inflation targeting in seven industrial countries," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2521-2533, November.
- Dell''Ariccia, Giovanni & Igan, Deniz & Laeven, Luc, 2008.
"Credit Booms and Lending Standards: Evidence From The Subprime Mortgage Market,"
CEPR Discussion Papers
6683, C.E.P.R. Discussion Papers.
- Giovanni Dell’Ariccia & Deniz Igan & Luc Laeven, 2012. "Credit Booms and Lending Standards: Evidence from the Subprime Mortgage Market," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44, pages 367-384, 03.
- Giovanni Dell'Ariccia & Luc Laeven & Deniz Igan, 2008. "Credit Booms and Lending Standards: Evidence from the Subprime Mortgage Market," IMF Working Papers 08/106, International Monetary Fund.
- Dell’Ariccia, G. & Igan, D. & Laeven, L., 2009. "Credit Booms and Lending Standards: Evidence from the Subprime Mortgage Market," Discussion Paper 2009-46 S, Tilburg University, Center for Economic Research.
- Nathalie Girouard & Mike Kennedy & Paul van den Noord & Christophe André, 2006. "Recent House Price Developments: The Role of Fundamentals," OECD Economics Department Working Papers 475, OECD Publishing.
- Jeffery Amato & Hyun Shin, 2006. "Imperfect common knowledge and the information value of prices," Economic Theory, Springer, vol. 27(1), pages 213-241, 01.
- William R. White, 2006. "Is price stability enough?," BIS Working Papers 205, Bank for International Settlements.
- Jean-Paul Fitoussi & Paul Hubert, 2010. "Monetary Policy, Imperfect Information and the Expectations Channel," Sciences Po publications info:hdl:2441/f4rshpf3v1u, Sciences Po.
- Allen, Franklin & Carletti, Elena, 2013. "New theories to underpin financial reform," Journal of Financial Stability, Elsevier, vol. 9(2), pages 242-249.
- Pierre-Richard Agénor & Luiz A. Pereira da Silva, 2013. "Rethinking Inflation Targeting: A Perspective from the Developing World," Centre for Growth and Business Cycle Research Discussion Paper Series 185, Economics, The Univeristy of Manchester.
- Pierre-Richard Agénor & Luiz A. Pereira da Silva, 2013. "Inflation Targeting and Financial Stability: A Perspective from the Developing World," Working Papers Series 324, Central Bank of Brazil, Research Department.
- Michel Bordo & John Lando-Lane, 2013. "Does Expansionary Monetary Policy Cause Asset Price Booms? Some Historical and Empirical Evidence," Working Papers Central Bank of Chile 710, Central Bank of Chile.
- Armand Fouejieu Azangue, 2012. "Coping with the Recent Financial Crisis, did Inflation Targeting Make Any Difference?," Working Papers halshs-00826277, HAL.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.