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Housing prices and macroeconomic factors: evidence from Chile

Listed author(s):
  • Carmen Silva
  • Camilo Vio
Registered author(s):

    This paper analyzes the housing prices in Chile by using a reduced form model of supply and demand for housing space that includes macroeconomic variables to explain its behavior. The empirical analysis is carried out for the national housing price index in Chile, published by the Central Bank of Chile, using quarterly data for the period 2002.I to 2013.I. The main results confirm previous findings in the literature for Chile and other countries. First, there is a significant long-run relationship between housing prices and macroeconomic variables; specifically, disposable income, long-term interest rate, and supply factors, such as construction costs. Second, the speed of adjustment to equilibrium is high: 90% of the gap from equilibrium closes at three quarters.

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    File URL: http://si2.bcentral.cl/public/pdf/revista-economia/2015/abr/recv18n1abr2015-pp4-24.pdf
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    Article provided by Central Bank of Chile in its journal Economía Chilena.

    Volume (Year): 18 (2015)
    Issue (Month): 1 (April)
    Pages: 4-24

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    Handle: RePEc:chb:bcchec:v:18:y:2015:i:1:p:4-24
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    1. Klaus Adam & Pei Kuang & Albert Marcet, 2012. "House Price Booms and the Current Account," NBER Macroeconomics Annual, University of Chicago Press, vol. 26(1), pages 77-122.
    2. John V Duca & John Muellbauer & Anthony Murphy, 2012. "Credit standards and the bubble in US house prices: new econometric evidence," BIS Papers chapters,in: Bank for International Settlements (ed.), Property markets and financial stability, volume 64, pages 83-89 Bank for International Settlements.
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    13. Eloisa T. Glindro & Tientip Subhanij & Jessica Szeto & Haibin Zhu, 2011. "Determinants of House Prices in Nine Asia-Pacific Economies," International Journal of Central Banking, International Journal of Central Banking, vol. 7(3), pages 163-204, September.
    14. Roberto Steiner & Natalia Salazar Ferro & Alejandro Becerra & Jaime Ramírez, 2012. "¿Qué tan desalineados están los precios de la vivienda en Colombia?," INFORMES DE INVESTIGACIÓN 010716, FEDESARROLLO.
    15. Luis M. Cubeddu & Camilo E Tovar Mora & Evridiki Tsounta, 2012. "Latin America; Vulnerabilities Under Construction?," IMF Working Papers 12/193, International Monetary Fund.
    16. Browne, Frank & Conefrey, Thomas & Kennedy, Gerard, 2013. "Understanding Irish house price movements - a user cost of capital approach," Research Technical Papers 04/RT/13, Central Bank of Ireland.
    17. Evridiki Tsounta, 2009. "Is the Canadian Housing Market Overvalued? A Post-crisis Assessment," IMF Working Papers 09/235, International Monetary Fund.
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