Working Paper: NBER ID: w19723
Authors: Kenneth N. Kuttner; Ilhyock Shim
Abstract: Using data from 57 countries spanning more than three decades, this paper investigates the effectiveness of nine non-interest rate policy tools, including macroprudential measures, in stabilizing house prices and housing credit. In conventional panel regressions, housing credit growth is significantly affected by changes in the maximum debt-service-to-income (DSTI) ratio, the maximum loan-to-value ratio, limits on exposure to the housing sector and housing-related taxes. But only the DSTI ratio limit has a significant effect on housing credit growth when we use mean group and panel event study methods. Among the policies considered, a change in housing-related taxes is the only policy tool with a discernible impact on house price appreciation.
Keywords: Housing Markets; Noninterest Rate Policies; Panel Data; Macroprudential Policy
JEL Codes: G21; G28; R31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| housing-related taxes (R51) | house price appreciation (R31) |
| exposure limits (K32) | credit cycles (E32) |
| loan-to-value (LTV) ratios (G32) | credit cycles (E32) |
| maximum debt-service-to-income (DSTI) ratio (F34) | housing credit growth (G21) |