Housing-market heterogeneity in a monetary union

Rubio, Margarita (2014) Housing-market heterogeneity in a monetary union. Journal of International Money and Finance, 40 . pp. 163-184. ISSN 1873-0639

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This paper studies the implications of cross-country housing-market heterogeneity in a monetary union for both shock transmission and welfare. I develop a two-country new Keynesian general equilibrium model with housing and collateral constraints to explore this issue. The conventional wisdom is that welfare would be higher in a monetary union if mortgage markets were homogeneous. This paper shows instead that welfare is higher only when homogenization does not result in higher aggregate volatility (because of financial accelerator effects) or does not redistribute too much wealth from borrowers to savers.

Item Type: Article
Keywords: Housing market; Collateral constraint; Monetary policy; Monetary union
Schools/Departments: University of Nottingham, UK > Faculty of Social Sciences > School of Economics
Identification Number: https://doi.org/10.1016/j.jimonfin.2013.06.013
Depositing User: Rubio, Margarita
Date Deposited: 15 Sep 2017 10:46
Last Modified: 14 Oct 2017 08:22
URI: http://eprints.nottingham.ac.uk/id/eprint/46405

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