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The Credit Channel of Monetary Policy: Evidence from the Housing Market

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  • Matteo Iacoviello

    ()
    (Boston College)

  • Raoul Minetti

    ()
    (Michigan State University)

Abstract

This paper tests a credit channel of monetary policy (especially a bank-lending channel) in the housing market. We argue that the relevance of the credit channel depends on the structural features of the housing finance system, in particular efficiency and institutional organisation. We employ a structural VAR approach to analyse this issue in four European housing markets (Finland, Germany, Norway and the UK). Our results support the existence of a broad credit channel and, in some contexts, of a bank-lending channel. More importantly, the findings show across countries a clear-cut relationship between presence of a credit (bank-lending) channel, efficiency of housing finance and type of institutions active in mortgage provision.

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Bibliographic Info

Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 541.

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Length: 41 pages
Date of creation: 01 Oct 2002
Date of revision: 29 Aug 2003
Handle: RePEc:boc:bocoec:541

Note: This paper was previously circulated with the title "The Credit Channel of Monetary Policy and the Housing Market: International Empirical Evidence"
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Keywords: Monetary transmission; bank-lending channel; house prices; vector autoregressions;

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References

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  22. Luigi Guiso & Anil K. Kashyap & Fabio Panetta & Daniele Terlizzese, 2000. "Will a Common European Monetary Policy Have Asymmetric Effects?," Temi di discussione (Economic working papers) 384, Bank of Italy, Economic Research and International Relations Area.
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