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The housing price boom of the late ’90s: did inflation targeting matter?

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  • Frappa, S.
  • Mésonnier, J-S.

Abstract

The recent boom in 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 correct for a possible bias due to self-selection into inflation targeting. We consider 17 industrial economies over 1980-2006, among which nine countries have targeted inflation a some dates. We find robust evidence of a significant positive effect of inflation targeting on real housing price growth and on the housing price to rent ratio.

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Bibliographic Info

Paper provided by Banque de France in its series Working papers with number 255.

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Length: 39 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:bfr:banfra:255

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Postal: Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS
Web page: http://www.banque-france.fr/
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Keywords: Inflation targeting; Housing prices; Treatment effect; OECD countries.;

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