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Income Expectations, Credit To Households, And Property Prices: Evidence From Indonesia And Brazil

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  • Huson Ali Ahmed

    (Deakin University)

Abstract

We investigate the long-term cointegration relation between residential property prices, household credit expansion, and household income expectations and identify the channels through which income expectation impacts residential property prices in the short term for Indonesia and Brazil. We find that improved income expectations raise the demand for credit, impacting residential property prices. Similar improvementsin income expectations also serve as important indicators for credit policy decisions, making more funding available to the household sector against the backdrop of rising property prices. In the short run, property prices respond significantly to one-time shocks in income expectations in Indonesia, while credit to households responds positively to property prices and private consumption expenditures in Brazil.

Suggested Citation

  • Huson Ali Ahmed, 2020. "Income Expectations, Credit To Households, And Property Prices: Evidence From Indonesia And Brazil," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 23(Special I), pages 33-60, January.
    • Handle: RePEc:idn:journl:v:23:y:2020:i:spc:p:33-60
    DOI: https://doi.org/10.21098/bemp.v23i0.1174
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    More about this item

    Keywords

    Income expectation; Household credit; Structural breaks; Shocks;
    All these keywords.

    JEL classification:

    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models

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