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Author: Daniel Dieckelmann
Publisher:
ISBN: 9789289959858
Category :
Languages : en
Pages : 0
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Book Description
The acceleration of house price growth amidst falling interest rates to record-low levels across euro area countries between 2015 and 2021 has sparked renewed interest in the link between the two variables. Asset-pricing theory suggests that real house prices respond to changes in real interest rates in a non-linear fashion. This non-linearity should be especially pronounced at very low real interest rates. Most existing empirical studies estimate models with a constant semi-elasticity, thereby ruling out by design the potential non-linearities between house prices and interest rates. To address this issue, we estimate a panel model for the euro area countries with a constant interest rate elasticity (as opposed to a constant semi-elasticity), which is consistent with asset pricing theory. Our empirical results suggest that, in a low interest rate environment such as the period between 2015 and 2021, non-linearities in the house price response to interest rate changes are important: an increase of real interest rates from ultra-low levels could lead to downward pressure on real house prices three to eight times higher than the literature suggests.
Author: Daniel Dieckelmann
Publisher:
ISBN: 9789289959858
Category :
Languages : en
Pages : 0
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Book Description
The acceleration of house price growth amidst falling interest rates to record-low levels across euro area countries between 2015 and 2021 has sparked renewed interest in the link between the two variables. Asset-pricing theory suggests that real house prices respond to changes in real interest rates in a non-linear fashion. This non-linearity should be especially pronounced at very low real interest rates. Most existing empirical studies estimate models with a constant semi-elasticity, thereby ruling out by design the potential non-linearities between house prices and interest rates. To address this issue, we estimate a panel model for the euro area countries with a constant interest rate elasticity (as opposed to a constant semi-elasticity), which is consistent with asset pricing theory. Our empirical results suggest that, in a low interest rate environment such as the period between 2015 and 2021, non-linearities in the house price response to interest rate changes are important: an increase of real interest rates from ultra-low levels could lead to downward pressure on real house prices three to eight times higher than the literature suggests.
Author: Andreas R. Dombret
Publisher:
ISBN:
Category : Bank failures
Languages : en
Pages : 18
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Book Description
"Are overheating housing markets and rising interest rate risks becoming a breeding ground for yet another banking crisis? The authors assess these risks for the German case. They find that they are indeed building up and may very well form the basis for a new banking crisis – unless prevented through responsible banking decisions, supervisory guidance, and policy adjustments."--Abstract.
Author: Mr.Martin Cihak
Publisher: International Monetary Fund
ISBN: 1451871058
Category : Business & Economics
Languages : en
Pages : 34
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Book Description
We examine the interest rate elasticity of housing prices, advancingthe empirical literature in two directions. First, we take a commonly used cross-country panel dataset and evaluate the housing price equation using a consistent estimator in the presence of endogenous explanatory variables and a lagged dependent variable. Second, we carry-out a novel analysis of determinants of residential housing prices in a cross-section of countries. Our results show that the short-term interest rate, and hence monetary policy, has a sizable impact on residential housing prices.
Author: Elizabeth Fretty
Publisher: Elizabeth Fretty
ISBN:
Category : Business & Economics
Languages : en
Pages : 41
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Book Description
Home listing prices continue to be high. Mortgage interest rates are high; the last time they were this high was in the early 2000s. But the cost of borrowing is likely to go up over the next year, which will make the decision much harder for people who may need to buy in that time. The majority of us will continue investing in the markets and accumulating money for a down payment until the housing market stabilizes. Q.ai eliminates uncertainty from investment. Here’s How Strange the Housing Market Is Getting Right Now. In other words, rising mortgage rates are bad news for the housing market, and the US just saw one of the sharpest hikes ever. Home buyers are now dealing with severe price shock as affordability indicators are deteriorating at their highest rate ever. In fact, a number of market milestones have been reached recently, with mortgage spreads and benchmark interest rates reaching levels that haven’t been seen in decades while the number of new sales is declining at a rate that is faster than even during the period following the global
Author: Leo Grebler
Publisher: Free Press
ISBN:
Category : Business & Economics
Languages : en
Pages : 280
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Book Description
Author: Edward Chancellor
Publisher: Grove Press
ISBN: 0802160077
Category : Business & Economics
Languages : en
Pages : 375
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Book Description
A comprehensive and profoundly relevant history of interest from one of the world’s leading financial writers, The Price of Time explains our current global financial position and how we got here In the beginning was the loan, and the loan carried interest. For at least five millennia people have been borrowing and lending at interest. The practice wasn’t always popular—in the ancient world, usury was generally viewed as exploitative, a potential path to debt bondage and slavery. Yet as capitalism became established from the late Middle Ages onwards, denunciations of interest were tempered because interest was a necessary reward for lenders to part with their capital. And interest performs many other vital functions: it encourages people to save; enables them to place a value on precious assets, such as houses and all manner of financial securities; and allows us to price risk. All economic and financial activities take place across time. Interest is often described as the “price of money,” but it is better called the “price of time:” time is scarce, time has value, interest is the time value of money. Over the first two decades of the twenty-first century, interest rates have sunk lower than ever before. Easy money after the global financial crisis in 2007/2008 has produced several ill effects, including the appearance of multiple asset price bubbles, a reduction in productivity growth, discouraging savings and exacerbating inequality, and forcing yield starved investors to take on excessive risk. The financial world now finds itself caught between a rock and a hard place, and Edward Chancellor is here to tell us why. In this enriching volume, Chancellor explores the history of interest and its essential function in determining how capital is allocated and priced.
Author: Mr. Serhan Cevik
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 19
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Book Description
This paper investigates house price dynamics at high frequency using city-level observations during the period 1994-2022 in Lithuania. We employ multiple time series-based econometric procedures to examine whether real house prices and house price-to-rent ratios exhibit explosive behavior. According to these recursive right-tailed test results, we reject the null hypothesis of no-bubble and find evidence for long and multiple periods of explosive behavior in the real estate market in all major cities during the sample period. While the size of bubbles varies across cities, especially when we use the house price-to-rent ratio, there is clearly a similar boom-bust pattern. Large house price corrections can in turn have adverse effects on economic performance and financial stability, as experienced during the global financial crisis and other episodes in history.
Author: Jane Dokko
Publisher:
ISBN:
Category : Monetary policy
Languages : en
Pages : 76
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Book Description
Author: Mark Blyth
Publisher: Oxford University Press
ISBN: 0197607853
Category : Economic development
Languages : en
Pages : 561
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Book Description
"The Global Financial Crisis and the following period of 'secular stagnation' have raised questions about the state of modern economics and macroeconomics in particular. This has had repercussions for social sciences that deal with economic issues. In particular in the fields of International Political Economy (IPE) and Comparative Political Economy (CPE) there is rising interest in non-mainstream macroeconomic theories (Blyth and Matthijs 2017, Baccaro and Pontussen 2016). In CPE there is a recognition that the field has in the past decades increasingly shifted to institutional and microeconomic questions and disregarded Keynesian considerations of macroeconomic instability and problems of fallacies of composition (Schwartz and Tranoy 2019). The purpose of this chapter is to give an overview of post-Keynesian economics (PKE) as a non-mainstream macroeconomic theory"--
Author: Mark Field
Publisher: Biteback Publishing
ISBN: 1785901176
Category : Political Science
Languages : en
Pages : 334
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Book Description
Tensions simmer in the aftermath of 2008's catastrophic financial crash. As the darkest days of the crisis fade behind us, great obstacles to prosperity remain. Mark Field's acclaimed first book, Between the Crashes, explored the economic collapse. Now, in his new collection of essays, the City of London MP charts our progress as the economy splutters back to life, untangling the rhetoric of deficit reduction from reality, and meaningful reform from political posture. The Best of Times traces the compromises of coalition government and the emergence of a new anti-establishment sentiment, taking in the Scottish independence referendum, UKIP's rise and fall, and the unexpected genesis of Corbynism. Conflicts in the Middle East open a dark chapter in foreign affairs while, closer to home, a shock Conservative victory in the 2015 general election ensures a hotly debated EU referendum. Yet, for all the surprises delivered by the past three years, today's challenges are deeply familiar: shifting global power, generational wars and disillusionment with capitalism still threaten our prosperity. Engaging and unflinching, The Best of Times offers erudite analysis and practical solutions to the challenges facing Britain today.
