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Federal Reserve Bank of St. Louis
Review
House prices and the stance of monetary policy
Marek Jarocinski
Frank Smets
Abstract

This paper estimates a Bayesian vector autoregression for the U.S. economy that includes a housing sector and addresses the following questions: Can developments in the housing sector be explained on the basis of developments in real and nominal gross domestic product and interest rates? What are the effects of housing demand shocks on the economy? How does monetary policy affect the housing market? What are the implications of house price developments for the stance of monetary policy? Regarding the latter question, we implement a C├ęspedes et al. (2006) version of a monetary conditions index.


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Marek Jarocinski & Frank Smets, "House prices and the stance of monetary policy" , Federal Reserve Bank of St. Louis, Review, issue Jul, pages 339-366, 2008.
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Keywords: Monetary policy ; Housing - Prices
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