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House Prices and Monetary Policy: Focus on The Elasticity of Intra-Temporal Substitution between Housing and Consumption

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  • In Ho Song

    (Korea Development Institute)

Abstract

According to the results, the interest rate rules responding to house prices have contributed more to inflation stability and output stability, than those that do not respond to house prices. As the central bank started to gradually emphasize the importance of output stability, the interest rate rules that respond to house prices generated noticeable effects, especially when the monetary policy goal targets 70% on inflation stability and 30% on output stability. However, few meaningful benefits were found from the only inflation-targeting monetary policy.

Suggested Citation

  • In Ho Song, 2013. "House Prices and Monetary Policy: Focus on The Elasticity of Intra-Temporal Substitution between Housing and Consumption," 2013 Meeting Papers 747, Society for Economic Dynamics.
    • Handle: RePEc:red:sed013:747
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    References listed on IDEAS

    as
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