Housing-market heterogeneity in a monetary union

Rubio, Margarita

Abstract

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. © 2013 Elsevier Ltd.

Citation

Rubio, M. (2014). Housing-market heterogeneity in a monetary union. Journal of International Money and Finance, 40, 163-184. https://doi.org/10.1016/j.jimonfin.2013.06.013

• Journal Article Type: Article
• Acceptance Date: Dec 1, 2013
• Online Publication Date: Jul 1, 2013
• Publication Date: 2014-02
• Deposit Date: Sep 15, 2017
• Publicly Available Date: Sep 15, 2017
• Journal: Journal of International Money and Finance
• Print ISSN: 0261-5606
• Electronic ISSN: 1873-0639
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 40
• Pages: 163-184
• DOI: https://doi.org/10.1016/j.jimonfin.2013.06.013
• Keywords: Housing market; Collateral constraint; Monetary policy; Monetary union
• Public URL: https://nottingham-repository.worktribe.com/output/720799
• Publisher URL: http://www.sciencedirect.com/science/article/pii/S0261560613000867