Asymmetric effects of monetary policy in regional housing markets
Peer reviewed, Journal article
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OriginalversjonAastveit, Knut Are, and André K. Anundsen. 2022. "Asymmetric Effects of Monetary Policy in Regional Housing Markets." American Economic Journal: Macroeconomics, 14 (4): 499-529 https://doi.org/10.1257/mac.20190011
The responsiveness of house prices to monetary policy shocks depends on the nature of the shock—expansionary versus contractionary—and on local housing supply elasticities. These findings are established using a panel of 263 US metropolitan areas. Expansionary monetary policy shocks have a larger impact on house prices in supply inelastic areas. Contractionary shocks are orthogonal to housing supply elasticities. In supply elastic areas, contractionary shocks have a greater impact on house prices than expansionary shocks. The opposite holds true in supply inelastic areas. We attribute this to asymmetric housing supply adjustments.