Interest Rate Elasticity of Residential Housing Prices

By Plamen K Iossifov, Martin Cihak, Amar Shanghavi

October 1, 2008

Preview Citation

Format: Chicago

Plamen K Iossifov, Martin Cihak, and Amar Shanghavi. Interest Rate Elasticity of Residential Housing Prices, (USA: International Monetary Fund, 2008) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We examine the interest rate elasticity of housing prices, advancingthe empirical literature in two directions. First, we take a commonly used cross-country panel dataset and evaluate the housing price equation using a consistent estimator in the presence of endogenous explanatory variables and a lagged dependent variable. Second, we carry-out a novel analysis of determinants of residential housing prices in a cross-section of countries. Our results show that the short-term interest rate, and hence monetary policy, has a sizable impact on residential housing prices.

Subject: Housing, Housing prices, Mortgages, Real estate prices, Short term interest rates

Keywords: Elasticity, GDP, Housing price, Interest rate, Price, Quote, WP

Publication Details

Pages:

32
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2008/247
Stock No:

WPIEA2008247
ISBN:

9781451871050
ISSN:

1018-5941

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