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Modelling Cyclical Divergence in the Euro Area: The Housing Channel

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  • Paul van den Noord

Abstract

After the launch of the single currency the euro exchange rate fell and interest rates had converged towards the (low) German level. These shocks have worked out differently for the small and large countries. Housing markets have acted as an important vehicle of transmission of these shocks onto economic activity and inflation. Simulations with a stylised econometric model for the euro area economy, making a distinction between the small and large countries in terms of the estimated parameters, illustrate this mechanism ... Modélisation de la divergence conjoncturelle dans la zone euro : Le canal de transmission du logement Après le lancement de la monnaie unique, le taux de change de l’euro avait baissé et les taux d’intérêt avaient convergé vers les taux allemands (qui se situaient à un bas niveau). Ces chocs se sont répercutés de manière différente sur les petites et les grandes économies. Les marchés du logement ont joué un rôle important de canal de transmission de ces chocs, en les répercutant sur l’activité économique et l’inflation. Des simulations effectuées à l’aide d’un modèle économétrique de l’économie de la zone euro, établissant une distinction entre les petites et les grandes économies en termes de paramètres estimés, illustrent ce mécanisme ...

Suggested Citation

  • Paul van den Noord, 2004. "Modelling Cyclical Divergence in the Euro Area: The Housing Channel," OECD Economics Department Working Papers 400, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:400-en
    DOI: 10.1787/710763183105
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    Cited by:

    1. Edward E. Leamer, 2007. "Housing is the business cycle," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 149-233.

    More about this item

    Keywords

    business cycles; cycle macroéconomique; Economic and Monetary Union; Union économique et monétaire;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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