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Monetary Policy and Regional House-Price Appreciation

Author

Listed:
  • Daniel Cooper

    (Federal Reserve Bank of Boston)

  • María José Luengo-Prado

    (Federal Reserve Bank of Boston)

  • Giovanni P. Olivei

    (Federal Reserve Bank of Boston)

Abstract

This paper examines the link between monetary policy and house-price appreciation by exploiting the fact that monetary policy is set at the national level, but the relative stance of policy can differ across U.S. states. This difference provides an exogenous source of variation to assess the effect of monetary policy on state-level housing prices. Monetary policy has an economically meaningful effect on state-level house-price growth - an effect that is nearly three times as large during the early 2000s housing boom as in non-boom years.

Suggested Citation

  • Daniel Cooper & María José Luengo-Prado & Giovanni P. Olivei, 2022. "Monetary Policy and Regional House-Price Appreciation," International Journal of Central Banking, International Journal of Central Banking, vol. 18(3), pages 173-227, September.
    • Handle: RePEc:ijc:ijcjou:y:2022:q:3:a:5
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    References listed on IDEAS

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    Cited by:

    1. Gianni La Cava & Calvin He, 2021. "The Distributional Effects of Monetary Policy: Evidence from Local Housing Markets in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(3), pages 387-397, September.
    2. Tan, Zhengxun & Tang, Qianqian & Meng, Juan, 2022. "The effect of monetary policy on China’s housing prices before and after 2017: A dynamic analysis in DSGE model," Land Use Policy, Elsevier, vol. 113(C).
    3. Calvin He & Gianni La Cava, 2020. "The Distributional Effects of Monetary Policy: Evidence from Local Housing Markets," RBA Research Discussion Papers rdp2020-02, Reserve Bank of Australia.
    4. Albuquerque, Bruno & Cerutti, Eugenio & Kido, Yosuke & Varghese, Richard, 2026. "Not all housing cycles are created equal: Macroeconomic consequences of housing booms," Journal of International Money and Finance, Elsevier, vol. 161(C).
    5. Segev, Nimrod & Schaffer, Matthew, 2020. "Monetary policy, bank competition and regional credit cycles: Evidence from a quasi-natural experiment," Journal of Corporate Finance, Elsevier, vol. 64(C).

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    More about this item

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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