Journal Article

Central banks and house prices in the run-up to the crisis

David Cobham

in Oxford Economic Papers

Volume 65, issue suppl_1, pages i42-i65
Published in print April 2013 | ISSN: 0030-7653
Published online December 2012 | e-ISSN: 1464-3812 | DOI: https://dx.doi.org/10.1093/oep/gps048
Central banks and house prices in the run-up to the crisis

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  • Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
  • Monetary Policy, Central Banking, and the Supply of Money and Credit

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The financial crisis and the role played within it by fluctuations in house prices has reopened the debate about whether monetary policy should respond to asset prices. This paper investigates how the central banks of the euro area, the UK and the US considered, understood and responded to the trends in house prices in the six or seven years preceding the crisis, and how they have analysed those developments since the crisis. It suggests that these central banks, particularly the Anglo-Saxon ones, might have been able to take some useful action if they had devoted more intellectual resources to analysing the possible misalignments of house prices and been willing to act on them.

Keywords: E52; E58; E65

Journal Article.  10420 words.  Illustrated.

Subjects: Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook ; Monetary Policy, Central Banking, and the Supply of Money and Credit

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