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Housing, the credit market, and unconventional monetary policies: from the sovereign crisis to the great lockdown

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  • Hamed Ghiaie

Abstract

This article evaluates the interactions between housing, the credit market, and the ECB’s asset purchase program (APP) from 2015 until 2020 and then in the course of the ECB’s pandemic emergency purchase program (PEPP) in 2020. The model is calibrated for the euro area. The findings illustrate the way in which macrohousing channels affect bank portfolio rebalancing which is the main channel for asset purchases to influence the economy. The results show that asset purchasing performs better during a crisis, particularly if it is conducted for an appropriate extent of time. The findings suggest that the PEPP alone is not sufficient to accelerate recovery. As a result, further actions such as timely targeted fiscal policies are required to step up recovery. However, to protect the financial sector, the PEPP should be extended until the Covid-19 crisis phase is over.

Suggested Citation

  • Hamed Ghiaie, 2024. "Housing, the credit market, and unconventional monetary policies: from the sovereign crisis to the great lockdown," Oxford Economic Papers, Oxford University Press, vol. 76(2), pages 330-350.
    • Handle: RePEc:oup:oxecpp:v:76:y:2024:i:2:p:330-350.
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    File URL: http://hdl.handle.net/10.1093/oep/gpad004
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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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