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Housing-market heterogeneity in a monetary union

Rubio, Margarita

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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.

Journal Article Type Article
Publication Date 2014-02
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
APA6 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
DOI https://doi.org/10.1016/j.jimonfin.2013.06.013
Keywords Housing market; Collateral constraint; Monetary policy; Monetary union
Publisher URL http://www.sciencedirect.com/science/article/pii/S0261560613000867
Copyright Statement Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0





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