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Bank credit and the housing market in OECD countries

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  • Philip Arestis
  • Ana González

Abstract

Relevant economic literature frequently focuses on the impact of credit shocks on housing prices. The macroeconomic doctrine of the new consensus macroeconomics completely ignores bank credit. However, the Great Recession has highlighted the importance of bank credit. The purpose of this article is to revisit this important macroeconomic variable. Consequently, we propose to endogenize the volume of bank credit by paying special attention to those variables that are related to the real estate market, which can be considered as key to the evolution of bank credit. Our theoretical hypothesis is tested by means of a sample of nine economies of the Organization for Economic Cooperation and Development (OECD) from 1970 to 2011. For this purpose, we apply the cointegration technique, which permits the modeling of the long-run equilibrium relationship and the short-run dynamics along with an error-correction term.

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  • Philip Arestis & Ana González, 2014. "Bank credit and the housing market in OECD countries," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 36(3), pages 467-490.
    • Handle: RePEc:mes:postke:v:36:y:2014:i:3:p:467-490
    DOI: 10.2753/PKE0160-3477360304
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    Cited by:

    1. Azwan, Nurul Iman & Masih, Mansur, 2019. "Is the relationship between housing price and banking debt symmetric or non-symmetric? evidence from Malaysia based on NARDL," MPRA Paper 94685, University Library of Munich, Germany.
    2. Engelbert Stockhammer & Christina Wolf, 2019. "Building blocks for the macroeconomics and political economy of housing," Japanese Economy, Taylor & Francis Journals, vol. 45(1-2), pages 43-67, April.
    3. Stockhammer, Engelbert & Wildauer, Rafael, 2018. "Expenditure Cascades, Low Interest Rates or Property Booms? Determinants of Household Debt in OECD Countries," Review of Behavioral Economics, now publishers, vol. 5(2), pages 85-121, September.
    4. Lena T. Cleanthous & Elena C. Eracleous & Nektarios A. Michail, 2019. "Credit, House Prices and the Macroeconomy in Cyprus," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 17(1), pages 33-55.
    5. Fennee Chong & Venus Khim-Shen Liew, 2020. "New Zealand's Residential Price Dynamics: Do capability to consume and government policies matter?," Economics Bulletin, AccessEcon, vol. 40(3), pages 2262-2274.
    6. James Wood & Engelbert Stockhammer, 2020. "House prices, private debt and the macroeconomics of comparative political economy," Working Papers PKWP2005, Post Keynesian Economics Society (PKES).
    7. Garšvienė Lina & Balčiūnaitė Kristina & Matuzevičiūtė Kristina & Ruplienė Dovilė, 2022. "Assessment of Factors Determining the Level of Private Credit in European Union Countries," Management of Organizations: Systematic Research, Sciendo, vol. 87(1), pages 67-82, June.
    8. Chung Yim Yiu, 2023. "A Natural Quasi-Experiment of the Monetary Policy Shocks on the Housing Markets of New Zealand during COVID-19," JRFM, MDPI, vol. 16(2), pages 1-16, January.

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