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Asset Prices, Credit Growth, Monetary and Other Policies: An Australian Case Study

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  • Paul Bloxham

    (Reserve Bank of Australia)

  • Christopher Kent

    (Reserve Bank of Australia)

  • Michael Robson

    (Reserve Bank of Australia)

Abstract

The long-running debate about the role of monetary policy in responding to rising asset prices has received renewed attention in the wake of the global financial crisis.This paper contributes to this debate by describing the Australian experience of a cycle in house prices and credit from 2002 to 2004, and discussing the role played by various policies during this episode. In particular, it focuses on the efforts by the Reserve Bank of Australia to draw attention to the risks associated with large, ongoing increases in housing prices and household borrowing.

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File URL: http://www.rba.gov.au/publications/rdp/2010/pdf/rdp2010-06.pdf
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Bibliographic Info

Paper provided by Reserve Bank of Australia in its series RBA Research Discussion Papers with number rdp2010-06.

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Date of creation: Sep 2010
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Handle: RePEc:rba:rbardp:rdp2010-06

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Keywords: asset prices; credit growth; lending standards; monetary policy; regulatory policy;

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References

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  1. Kristoffer Nimark & Jarkko Jääskelä, 2008. "A medium-scale open economy model of Australia," Economics Working Papers 1210, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Gruen, David & Plumb, Michael & Stone, Andrew, 2005. "How Should Monetary Policy Respond to Asset-Price Bubbles?," MPRA Paper 833, University Library of Munich, Germany.
  3. Christopher Kent & Crystal Ossolinski & Luke Willard, 2007. "The Rise of Household Indebtedness," RBA Annual Conference Volume, in: Christopher Kent & Jeremy Lawson (ed.), The Structure and Resilience of the Financial System Reserve Bank of Australia.
  4. Lawrence Christiano & Roberto Motto & Massimo Rostagno, 2007. "Two Reasons Why Money and Credit May be Useful in Monetary Policy," NBER Working Papers 13502, National Bureau of Economic Research, Inc.
  5. Alasdair Scott & Pau Rabanal & Prakash Kannan, 2009. "Macroeconomic Patterns and Monetary Policy in the Run-Up to Asset Price Busts," IMF Working Papers 09/252, International Monetary Fund.
  6. Stephen G. Cecchetti & Hans Genberg & Sushil Wadhwani, 2002. "Asset Prices in a Flexible Inflation Targeting Framework," NBER Working Papers 8970, National Bureau of Economic Research, Inc.
  7. Kannan Prakash & Rabanal Pau & Scott Alasdair M., 2012. "Monetary and Macroprudential Policy Rules in a Model with House Price Booms," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-44, June.
  8. Hoerova, Marie & Monnet, Cyril & Temzelides, Ted, 2012. "Money talks," Economics Letters, Elsevier, vol. 116(3), pages 617-621.
  9. Okina, Kunio & Shirakawa, Masaaki & Shiratsuka, Shigenori, 2001. "The Asset Price Bubble and Monetary Policy: Japan's Experience in the Late 1980s and the Lessons: Background Paper," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 19(S1), pages 395-450, February.
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Cited by:
  1. Masahiro Kawai & Peter J. Morgan, 2012. "Central Banking for Financial Stability in Asia," Governance Working Papers 23328, East Asian Bureau of Economic Research.
  2. Pau Rabanal & Christopher W. Crowe & Giovanni Dell'Ariccia & Deniz Igan, 2011. "How to Deal with Real Estate Booms," IMF Working Papers 11/91, International Monetary Fund.
  3. Adam Cagliarini & Christopher Kent & Glenn Stevens, 2010. "Fifty Years of Monetary Policy: What Have We Learned?," RBA Annual Conference Volume, in: Christopher Kent & Michael Robson (ed.), Reserve Bank of Australia 50th Anniversary Symposium Reserve Bank of Australia.
  4. Tom Cusbert & Thomas Rohling, 2013. "Currency Demand during the Global Financial Crisis: Evidence from Australia," RBA Research Discussion Papers rdp2013-01, Reserve Bank of Australia.
  5. Jonathan Kearns & Philip Lowe, 2011. "Australia's Prosperous 2000s: Housing and the Mining Boom," RBA Annual Conference Volume, in: Hugo Gerard & Jonathan Kearns (ed.), The Australian Economy in the 2000s Reserve Bank of Australia.
  6. Joon-Ho Hahm & Frederic S. Mishkin & Hyun Song Shin & Kwanho Shin, 2012. "Macroprudential Policies in Open Emerging Economies," NBER Working Papers 17780, National Bureau of Economic Research, Inc.
  7. Claudio Borio, 2011. "Rediscovering the Macroeconomic Roots of Financial Stability Policy: Journey, Challenges, and a Way Forward," Annual Review of Financial Economics, Annual Reviews, vol. 3(1), pages 87-117, December.
  8. repec:cbk:journl:v:2:y:2013:i:1:p:5-18 is not listed on IDEAS
  9. Crowe, Christopher & Dell’Ariccia, Giovanni & Igan, Deniz & Rabanal, Pau, 2013. "How to deal with real estate booms: Lessons from country experiences," Journal of Financial Stability, Elsevier, vol. 9(3), pages 300-319.
  10. Judith Yates, 2011. "Housing in Australia in the 2000s: On the Agenda Too Late?," RBA Annual Conference Volume, in: Hugo Gerard & Jonathan Kearns (ed.), The Australian Economy in the 2000s Reserve Bank of Australia.
  11. Claudio Borio, 2011. "Central banking post-crisis: What compass for uncharted waters?," BIS Working Papers 353, Bank for International Settlements.
  12. Elizabeth Watson, 2012. "Risk, return, and beyond: A conceptual analysis of some factors influencing New Zealanders’ investment decisions," Reserve Bank of New Zealand Analytical Notes series AN2012/07, Reserve Bank of New Zealand.
  13. Fredric Mishkin, 2011. "How Should Central Banks Respond to Asset-Price Bubbles? The 'Lean' versus 'Clean' Debate After the GFC," RBA Bulletin, Reserve Bank of Australia, pages 59-70, June.
  14. Alexandra Heath & Frank Packer & Callan Windsor, 2012. "Introduction to Property Markets and Financial Stability," RBA Annual Conference Volume, in: Alexandra Heath & Frank Packer & Callan Windsor (ed.), Property Markets and Financial Stability Reserve Bank of Australia.
  15. Akcelik, Yasin & Aysan, Ahmet Faruk & Oduncu, Arif, 2013. "Central Banking in Making during the Post-crisis World and the Policy-Mix of the Central Bank of the Republic of Turkey," MPRA Paper 46612, University Library of Munich, Germany.
  16. Elizabeth Watson, 2012. "Asset returns and the investment choices of New Zealanders," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 75, pages 26-34, September.

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