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Impact of macroprudential policies on house price expectations- evidence from survey data

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  • Rooj, Debasis
  • Banerjee, Anurag
  • Sengupta, Reshmi

Abstract

This paper investigates the impact of macroprudential policies (MPP) on house price expectations using novel data from the Inflation Expectation of Households survey across 19 major Indian cities released by the Reserve Bank of India. MPP negatively impacts house price expectations, especially borrower-based macroprudential policies. We also find that tightening MPP impacts the retired group more than other occupational groups.

Suggested Citation

  • Rooj, Debasis & Banerjee, Anurag & Sengupta, Reshmi, 2024. "Impact of macroprudential policies on house price expectations- evidence from survey data," Economics Letters, Elsevier, vol. 236(C).
    • Handle: RePEc:eee:ecolet:v:236:y:2024:i:c:s0165176524000958
    DOI: 10.1016/j.econlet.2024.111612
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    References listed on IDEAS

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    1. Hjalmarsson, Erik & Österholm, Pär, 2020. "Heterogeneity in households’ expectations of housing prices – evidence from micro data," Journal of Housing Economics, Elsevier, vol. 50(C).
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    4. Michael Bailey & Eduardo Dávila & Theresa Kuchler & Johannes Stroebel, 2019. "House Price Beliefs And Mortgage Leverage Choice," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(6), pages 2403-2452.
    5. Alessia De Stefani, 2021. "House price history, biased expectations, and credit cycles: The role of housing investors," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(4), pages 1238-1266, December.
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    7. Saha, Asish & Rooj, Debasis & Sengupta, Reshmi, 2023. "Macroprudential Policy and mortgage leverage decisions—Evidence from micro data," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1430-1444.
    8. Tim Landvoigt, 2017. "Housing Demand During the Boom: The Role of Expectations and Credit Constraints," The Review of Financial Studies, Society for Financial Studies, vol. 30(6), pages 1865-1902.
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    2. Duprey, Thibaut & Tuzcuoglu, Kerem, 2025. "High-frequency effects of macroprudential policy announcements," Economics Letters, Elsevier, vol. 250(C).

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    Keywords

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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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