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Can Non-Interest Rate Policies Stabilize Housing Markets? Evidence from a Panel of 57 Economies

Listed author(s):
  • Kenneth N. Kuttner
  • Ilhyock Shim

Using data from 57 countries spanning more than three decades, this paper investigates the effectiveness of nine non-interest rate policy tools, including macroprudential measures, in stabilizing house prices and housing credit. In conventional panel regressions, housing credit growth is significantly affected by changes in the maximum debt-service-to-income (DSTI) ratio, the maximum loan-to-value ratio, limits on exposure to the housing sector and housing-related taxes. But only the DSTI ratio limit has a significant effect on housing credit growth when we use mean group and panel event study methods. Among the policies considered, a change in housing-related taxes is the only policy tool with a discernible impact on house price appreciation.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19723.

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Date of creation: Dec 2013
Publication status: published as Kenneth N. Kuttner & Ilhyock Shim, 2016. "Can non-interest rate policies stabilize housing markets? Evidence from a panel of 57 economies," Journal of Financial Stability, .
Handle: RePEc:nbr:nberwo:19723
Note: ME
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