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The Drivers of Housing Cycles in Spain

Author

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  • Mr. Pau Rabanal
  • Oriol Aspachs-Bracons

Abstract

Since Spain joined the EMU, two main important factors behind the housing boom appear to be the decrease of nominal interest rates and demographic factors. In this paper we estimate a New Keynesian model of a currency area, using data for Spain and the rest of the EMU to study the importance of those factors. We also examine the role of different rigidities and find that labor market frictions are crucial to explain main features of the data. On the other hand, financial frictions that impose a collateral constraint on borrowing do not appear to be relevant.

Suggested Citation

  • Mr. Pau Rabanal & Oriol Aspachs-Bracons, 2009. "The Drivers of Housing Cycles in Spain," IMF Working Papers 2009/203, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2009/203
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    References listed on IDEAS

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    More about this item

    Keywords

    WP; durable goods; technology shock; consumption goods; price level; monetary policy shock; investment adjustment cost; preference shock; utility function; nondurable goods; Consumption; Housing; Housing prices; Return on investment; Europe;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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