The housing price boom of the late 1990s: Did inflation targeting matter?
The recent boom in the 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 control for a possible bias due to self-selection into inflation targeting. We consider 17 industrial economies over the period 1980-2007, among which nine countries have targeted inflation at some point. We find robust evidence of a significant positive effect of inflation targeting on real house price growth and on the house price-to-rent ratio.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dell’Ariccia, G. & Igan, D. & Laeven, L., 2009.
"Credit Booms and Lending Standards : Evidence from the Subprime Mortgage Market,"
2009-46 S, Tilburg University, Center for Economic Research.
- Giovanni Dell’Ariccia & Deniz Igan & Luc Laeven, 2012. "Credit Booms and Lending Standards: Evidence from the Subprime Mortgage Market," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44, pages 367-384, 03.
- DellAriccia, Giovanni & Igan, Deniz & Laeven, Luc, 2008. "Credit Booms and Lending Standards: Evidence From The Subprime Mortgage Market," CEPR Discussion Papers 6683, C.E.P.R. Discussion Papers.
- Giovanni Dell'Ariccia & Luc Laeven & Deniz Igan, 2008. "Credit Booms and Lending Standards; Evidence From the Subprime Mortgage Market," IMF Working Papers 08/106, International Monetary Fund.
- Stephan V Arthur, 2005. "Obtaining real estate data: criteria, difficulties and limitations," BIS Papers chapters, in: Bank for International Settlements (ed.), Real estate indicators and financial stability, volume 21, pages 63-69 Bank for International Settlements.
- Lecat, R. & Mésonnier, J-S., 2005. "Dynamique des prix des logements : quel rôle des facteurs financiers ?," Bulletin de la Banque de France, Banque de France, issue 133, pages 29-47.
- Lin, Shu & Ye, Haichun, 2007. "Does inflation targeting really make a difference? Evaluating the treatment effect of inflation targeting in seven industrial countries," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2521-2533, November.
- Torsten Persson, 2001. "Currency unions and trade: how large is the treatment effect?," Economic Policy, CEPR;CES;MSH, vol. 16(33), pages 433-462, October.
- Claessens, Stijn & Kose, Ayhan & Terrones, Marco E, 2008.
"What Happens During Recessions, Crunches and Busts?,"
CEPR Discussion Papers
7085, C.E.P.R. Discussion Papers.
- Stijn Claessens & M. Ayhan Kose & Marco E. Terrones, 2009. "What happens during recessions, crunches and busts?," Economic Policy, CEPR;CES;MSH, vol. 24, pages 653-700, October.
- Marco Terrones & Ayhan Kose & Stijn Claessens, 2008. "What Happens During Recessions, Crunches and Busts?," IMF Working Papers 08/274, International Monetary Fund.
- Markus Frölich, 2004. "Finite-Sample Properties of Propensity-Score Matching and Weighting Estimators," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 77-90, February.
- Vega, Marco & Winkelried, Diego, 2004.
"Inflation Targeting and Inflation Behavior: A Successful Story?,"
838, University Library of Munich, Germany.
- Marco Vega & Diego Winkelried, 2005. "Inflation Targeting and Inflation Behavior: A Successful Story?," International Journal of Central Banking, International Journal of Central Banking, vol. 1(3), December.
- Marco Vega & Diego Winkelried, 2005. "Inflation Targeting and Inflation Behavior: A Successful Story?," Macroeconomics 0502026, EconWPA.
- Alessandro Calza & Tommaso Monacelli & Livio Stracca, 2013.
"Housing Finance And Monetary Policy,"
Journal of the European Economic Association,
European Economic Association, vol. 11, pages 101-122, 01.
- Claudio E. V. Borio & Wiliam English & Andrew Filardo, 2003.
"A tale of two perspectives: old or new challenges for monetary policy?,"
BIS Working Papers
127, Bank for International Settlements.
- Claudio Borio & William English & Andrew Filardo, 2003. "A tale of two perspectives: old or new challenges for monetary policy?," BIS Papers chapters, in: Bank for International Settlements (ed.), Monetary policy in a changing environment, volume 19, pages 1-59 Bank for International Settlements.
- Kostas Tsatsaronis & Haibin Zhu, 2004. "What drives housing price dynamics: cross-country evidence," BIS Quarterly Review, Bank for International Settlements, March.
- William R. White, 2006. "Is price stability enough?," BIS Working Papers 205, Bank for International Settlements.
- Katrin Assenmacher-Wesche & Stefan Gerlach, 2008.
"Ensuring financial stability: financial structure and the impact of monetary policy on asset prices,"
IEW - Working Papers
361, Institute for Empirical Research in Economics - University of Zurich.
- Assenmacher-Wesche, Katrin & Gerlach, Stefan, 2008. "Ensuring Financial Stability: Financial Structure and the Impact of Monetary Policy on Asset Prices," CEPR Discussion Papers 6773, C.E.P.R. Discussion Papers.
- Assenmacher-Wesche, Katrin & Gerlach, Stefan, 2008. "Ensuring financial stability: Financial structure and the impact of monetary policy on asset prices," IMFS Working Paper Series 16, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).
- Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 1999. "A new database on financial development and structure," Policy Research Working Paper Series 2146, The World Bank.
- M. H. Khalil Timamy, 2005. "Debate," Review of African Political Economy, Taylor & Francis Journals, vol. 32(104-105), pages 383-393, June.
- James J. Heckman & Hidehiko Ichimura & Petra Todd, 1998. "Matching As An Econometric Evaluation Estimator," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 261-294.
- Bjørnland, Hilde C. & Jacobsen, Dag Henning, 2010.
"The role of house prices in the monetary policy transmission mechanism in small open economies,"
Journal of Financial Stability,
Elsevier, vol. 6(4), pages 218-229, December.
- Hilde C. Bjørnland & Dag Henning Jacobsen, 2009. "The role of house prices in the monetary policy transmission mechanism in small open economies," Working Paper 2009/06, Norges Bank.
- Nathalie Girouard & Mike Kennedy & Paul van den Noord & Christophe André, 2006. "Recent House Price Developments: The Role of Fundamentals," OECD Economics Department Working Papers 475, OECD Publishing.
- Jeffrey M. Wooldridge, 2001.
"Econometric Analysis of Cross Section and Panel Data,"
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 0262232197, December.
- Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
- Jeffery Amato & Hyun Shin, 2006. "Imperfect common knowledge and the information value of prices," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 27(1), pages 213-241, 01.
- Frederic S. Mishkin, 2004. "Can Inflation Targeting Work in Emerging Market Countries?," NBER Working Papers 10646, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:eee:finsta:v:6:y:2010:i:4:p:243-254. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.