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The housing price boom of the late ’90s: did inflation targeting matter?

Author

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  • Frappa, S.
  • Mésonnier, J-S.

Abstract

The recent boom in 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 correct for a possible bias due to self-selection into inflation targeting. We consider 17 industrial economies over 1980-2006, among which nine countries have targeted inflation a some dates. We find robust evidence of a significant positive effect of inflation targeting on real housing price growth and on the housing price to rent ratio.

Suggested Citation

  • Frappa, S. & Mésonnier, J-S., 2009. "The housing price boom of the late ’90s: did inflation targeting matter?," Working papers 255, Banque de France.
  • Handle: RePEc:bfr:banfra:255
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    References listed on IDEAS

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    Cited by:

    1. Emmanuelle Lavallée & Vincent Vicard, 2013. "National borders matterwhere one draws the lines too," Canadian Journal of Economics, Canadian Economics Association, vol. 46(1), pages 135-153, February.
    2. Luke Byrne Willard, 2012. "Does inflation targeting matter? A reassessment," Applied Economics, Taylor & Francis Journals, vol. 44(17), pages 2231-2244, June.
    3. Cobham, David, 2018. "A comprehensive classification of monetary policy frameworks for advanced and emerging economies," MPRA Paper 84737, University Library of Munich, Germany.

    More about this item

    Keywords

    Inflation targeting; Housing prices; Treatment effect; OECD countries.;

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • 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

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