Arbeitspapier
Optimal monetary policy during endogenous housing-market boom-bust cycles
This paper uses a small-open economy model for the Canadian economy to examine the optimal Taylor-type monetary policy rule that stabilizes output and inflation in an environment where endogenous boom-bust cycles in house prices can occur. The model shows that boom-bust cycles in house prices emerge when credit-constrained mortgage borrowers expect that future house prices will rise and this expectation is neither shared by savers nor realized ex-post. These boom-bust cycles replicate the stylized features of housing-market boom-bust cycles in industrialized countries. In an environment where mortgage borrowers are occasionally over-optimistic, the central bank should be less responsive to inflation, more responsive to output, and slower to adjust the nominal policy interest rate. This optimal monetary policy rule dampens endogenous boom-bust cycles in house prices, but prolongs inflation target horizons due to weak policy reactions to inflation fluctuations after fundamental shocks.
- Sprache
-
Englisch
- Erschienen in
-
Series: Bank of Canada Working Paper ; No. 2009-32
- Klassifikation
-
Wirtschaft
Financial Markets and the Macroeconomy
Monetary Policy
- Thema
-
Credit and credit aggregates
Financial stability
Inflation targets
Konjunktur
Immobilienpreis
Geldpolitik
Gesamtwirtschaftliche Produktion
Inflationsrate
Taylor-Regel
Kleines-offenes-Land
Kanada
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Tomura, Hajime
- Ereignis
-
Veröffentlichung
- (wer)
-
Bank of Canada
- (wo)
-
Ottawa
- (wann)
-
2009
- DOI
-
doi:10.34989/swp-2009-32
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:46 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Tomura, Hajime
- Bank of Canada
Entstanden
- 2009