Real Estate Price Inflation, Monetary Policy, and Expectations in the United States and Japan

January 1, 1994

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Format: Chicago

Hossein Samiei, and Garry J. Schinasi Real Estate Price Inflation, Monetary Policy, and Expectations in the United States and Japan, (USA: International Monetary Fund, 1994) accessed September 26, 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

During the mid- to late 1980s, inflationary pressures were highly concentrated in asset markets in many industrial countries. This paper discusses why this may have occurred and then develops a forward-looking supply and demand model of the real estate market in which equilibrium prices depend on price expectations, monetary conditions, income, returns to alternative assets, and construction costs. In this model, the current equilibrium price is determined by expectations formed in different time periods by consumers and producers. The model and its more generalized dynamic specifications are estimated by maximum-likelihood methods. The empirical results do not reject the view that the relationship between real estate values and monetary policy was altered in 1980s.

Subject: Asset prices, Housing prices, Inflation, Land prices, Monetary base, Money, Prices, Real estate prices

Keywords: Asset price inflation, Asset prices, Construction cost, Goods-price inflation, Inflation, Land prices, Monetary base, Monetary policy, Property price, Real estate prices, Real interest rate, User-cost model, WP

Publication Details

Pages:

50
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1994/012
Stock No:

WPIEA0121994
ISBN:

9781451925555
ISSN:

1018-5941

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