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Home Ownership and Monetary Policy Transmission

Author

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  • Winfried Koeniger
  • Marc-Antoine Ramelet

Abstract

We present empirical evidence on the heterogeneity in monetary policy transmission across countries with different home ownership rates. We use household-level data together with shocks to the policy rate identified from high-frequency data. We find that housing tenure reacts more strongly to unexpected changes in the policy rate in Germany and Switzerland –the OECD countries with the lowest home ownership rates– compared with existing evidence for the U.S. An unexpected decrease in the policy rate by 25 basis points increases the home ownership rate by 0.8 percentage points in Germany and by 0.6 percentage points in Switzerland. The response of non-housing consumption in Switzerland is less heterogeneous across renters and mortgagors, and has a different pattern across age groups than in the U.S. We discuss economic explanations for these findings and implications for monetary policy.

Suggested Citation

  • Winfried Koeniger & Marc-Antoine Ramelet, 2018. "Home Ownership and Monetary Policy Transmission," CESifo Working Paper Series 7361, CESifo Group Munich.
    • Handle: RePEc:ces:ceswps:_7361
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    References listed on IDEAS

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    1. Corsetti, Giancarlo & Duarte, Joao B. & Mann, Samuel, 2018. "One money, many markets: a factor model approach to monetary policy in the Euro Area with high-frequency identification," LSE Research Online Documents on Economics 87182, London School of Economics and Political Science, LSE Library.
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    Cited by:

    1. Dimitris Georgarakos & Konstantinos Tatsiramos, 2019. "Monetary policy transmission to consumer financial stress and durable consumption," CESifo Working Paper Series 7671, CESifo Group Munich.

    More about this item

    Keywords

    monetary policy transmission; home ownership; housing tenure; consumption;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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