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The responsiveness of house prices to monetary policy shocks depends both on the nature of the shock – expansionary …
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This paper studies the optimal interest rate rule in a DSGE model with housing market spillovers (Iacoviello and Neri (2010)). We find that the optimal rule responds to house price inflation even when the stabilization of house price is not among the objectives of the policymaker, and that the...
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shocks, while a contractionary monetary policy shock depress housing output, demand and prices. Additionally, we find …
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