TY  - JOUR
AB  - Purpose The purpose of this paper is to explore the role of the housing market in the monetary policy transmission to consumption among euro area member states. It has been argued that the housing market in one country is then important when its mortgage market is well developed. The countries in the euro area follow unitary monetary policy; however, their housing and mortgage markets show some heterogeneity, which may lead to different policy effects on aggregate consumption through the housing market.Design/methodology/approach The housing market can act as a channel of monetary policy shocks to household consumption through changes in house prices and residential investment – the housing market channel. The authors estimate vector autoregressive models for each country and conduct a counterfactual analysis to disentangle the housing market channel and assess its importance across the euro area member states.Findings The authors find little evidence for heterogeneity of the monetary policy transmission through house prices across the euro area countries. Housing market variations in the euro area seem to be better captured by changes in residential investment rather than by changes in house prices. As a result, the authors do not find significantly large house price channels. For some of the countries however, they observe a monetary policy channel through residential investment. The existence of a housing channel may depend on institutional features of both the labour market or with institutional factors capturing the degree of household debt as is the loan-to-value ratio.Originality/value The study contributes to the existing literature by assessing whether a unitary monetary policy has a different impact on consumption across the euro area countries through their housing and mortgage markets. The authors disentangle monetary-policy-induced effects on consumption associated with variations on the housing markets due to either house price variations or residential investment changes. The authors show that the housing market can play a role in the monetary transmission mechanism even in countries with less developed mortgage markets through variations in residential investment.
VL  - 9
IS  - 1
SN  - 1753-9269
DO  - 10.1108/JERER-02-2015-0009
UR  - https://doi.org/10.1108/JERER-02-2015-0009
AU  - Milcheva Stanimira
AU  - Sebastian Steffen
PY  - 2016
Y1  - 2016/01/01
TI  - The housing market channel of monetary policy transmission in the Euro area
T2  - Journal of European Real Estate Research
PB  - Emerald Group Publishing Limited
SP  - 76
EP  - 97
Y2  - 2024/04/19
ER  -