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Do expansionary and contractionary monetary policy have a symmetric impact on housing permits across the USA?

Mohsen Bahaman-Oskooee (Department of Economics, University of Wisconsin-Milwaukee, Milwaukee, Wisconsin, USA)
Hesam Ghodsi (Morningstar Inc, Chicago, Illinois, USA)
Muris Hadzic (Department of Economics, Business and Finance, Lake Forest College, Lake Forest, Illinois, USA)
Hardik Marfatia (Department of Economics, Northeastern Illinois University, Chicago, Illinois, USA)

International Journal of Housing Markets and Analysis

ISSN: 1753-8270

Article publication date: 6 April 2023

67

Abstract

Purpose

The purpose of this paper is to assess the possibility of asymmetric impact of monetary policy on housing permits issued in each state of the USA.

Design/methodology/approach

The methodology and approach are based on the linear ARDL and nonlinear ARDL approach to error-correction modeling and asymmetric cointegration.

Findings

The linear models predict that money supply impact housing permits in 28 states in the short run and only nine states in the long run. However, the asymmetric effects are far more pervasive, highlighting the restrictive nature of the linear model. The results from the nonlinear model show at least one lag of positive and/or negative changes in money supply significantly impacts housing permits in nearly all states. Even in the long run, housing permits in 32 states share a long-run relationship with positive and/or negative changes in money supply. The authors also find contractionary monetary policy has a greater influence on housing permits in most states compared to expansionary policy.

Originality/value

For the first time, the authors use state-level data and asymmetric approach to assess the impact of monetary policy on house permits issued in each state of the USA.

Keywords

Acknowledgements

Valuable comments of two anonymous referees are greatly appreciated. Any remaining error, however, is our own.

All views and information expressed on this paper do not represent the opinions of any entity whatsoever with which the author has been, is now or will be affiliated.

Citation

Bahaman-Oskooee, M., Ghodsi, H., Hadzic, M. and Marfatia, H. (2023), "Do expansionary and contractionary monetary policy have a symmetric impact on housing permits across the USA?", International Journal of Housing Markets and Analysis, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJHMA-12-2022-0181

Publisher

:

Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

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