tailieunhanh - Housing Bubbles and Interest Rates by Christian Hott and Terhi Jokipii

A number of studies (see, for example, Iacoviello (2005) or Calza et al (2009)) apply the nancial accelerator to the housing market, where a similar mechanism is at work. A reduction in interest rates increases the value of collateral (housing) by increasing the discounted value of future user costs. The borrowers' debt capacity and consequently the demand for housing increases further, generating an even larger increase in house prices. Persistence and ampli cation would be mutually reinforcing and propagate the effect of the initial shock to interest rates on housing activity. The studies predict the transmission channels to be stronger in countries with more developed mortgage markets. Higher. | Swiss National Bank Working Papers 2012-7 SCHWEIZERISCHE NATIONALBANK BANQUE NATIONALE SUISSE BANCA NAZIONALE SVIZZERA BANCANAZIUNALASVIZRA SWISS NATIONAL BANK Housing Bubbles and Interest Rates The views expressed in this paper are those of the author s and do not necessarily represent those of the Swiss National Bank. Working Papers describe research in progress. Their aim is to elicit comments and to further debate. Copyright The Swiss National Bank SNB respects all third-party rights in particular rights relating to works protected by copyright information or data wordings and depictions to the extent that these are of an individual character . SNB publications containing a reference to a copyright Swiss National Bank SNB Zurich year or similar may under copyright law only be used reproduced used via the internet etc. for non-commercial purposes and provided that the source is mentioned. Their use for commercial purposes is only permitted with the prior express consent of the SNB. General information and data published without reference to a copyright may be used without mentioning the source. To the extent that the information and data clearly derive from outside sources the users of such information and data are obliged to respect any existing copyrights and to obtain the right of use from the relevant outside source themselves. Limitation of liability The SNB accepts no responsibility for any information it provides. Under no circumstances will it accept any liability for losses or damage which may result from the use of such information. This limitation of liability applies in particular to the topicality accuracy validity and availability of the information. ISSN 1660-7716 printed version ISSN 1660-7724 online version 2012 by Swiss National Bank Borsenstrasse 15 . Box CH-8022 Zurich Housing Bubbles and Interest Rates Christian Hott and Terhi Jokipid Abstract In this paper we assess whether persistently too low interest rates can cause housing bubbles. .