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Housing and monetary policy : Evidence of the stabilization effect in Korea derived from a DSGE Model

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  • Housing and monetary policy
  • Lim, Seul-Ye; Yoo, Seung-Hoon
  • Korean Association for Housing Policy Studies


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Title Housing and monetary policy
Similar Titles
Sub Title

Evidence of the stabilization effect in Korea derived from a DSGE Model

Material Type Articles
Author(English)

Lim, Seul-Ye; Yoo, Seung-Hoon

Publisher

[Anyang]:Korean Association for Housing Policy Studies

Date 2016-02
Journal Title; Vol./Issue Housing Studies Review:Vol. 24(No. 1)
Pages 21
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Financial Policy
Social Development < Others
Holding Korean Association for Housing Policy Studies

Abstract

Research interest concerning macroeconomic linkages in housing has piqued since the Global Financial Crisis (GFC) of 2007-09. This paper documents evidence of such linkage in the Korean context derived from a DSGE(Dynamic Stochastic General Equilibrium) model that controls endogenous relationships between housing price and key macroeconomic variables. In particular, there are two analytical issues in our theoretical and empirical investigation: (1) the intra-temporal (or single-period) substitution between housing and non-housing consumption and (2) the stabilization effect of monetary policy from two alternative policy rules – a conventional Taylor rule that does not consider housing price vs. a modified Taylor rule that does. The results show that: (1) housing and non-housing consumption in Korea are complements, rather than substitutes, implying a positive wealth effect in that a rise in one variable causes the same direction in the other and (The rest omitted)