Title: The regional impact of monetary policy on house prices

Authors: Larry Allen; George N. Kenyon; Vivek S. Natarajan

Addresses: Lamar University, Box 10045 L.U. Station, Beaumont, TX 77710, USA ' Lamar University, Box 10025 L.U. Station, Beaumont, TX 77710, USA ' Lamar University, Box 10025 L.U. Station, Beaumont, TX 77710, USA

Abstract: This paper examines how house prices respond to monetary policy in the nine census regions of the USA. A polynomial distributed lag regression model is estimated for each region. The dependent variable in each equation includes growth for the index of regional house prices. The independent variables include: (1) growth for an index of national house prices; (2) difference between the regional unemployment rate and the national unemployment; (3) the growth in M2. The money stock variable enters each equation as a polynomial distributed lag. Given this specification, regional house prices are positively correlated with money stock growth in some regions, and negatively correlated in others.

Keywords: monetary policies; housing; demographics; regional economics; USA; United States; census regions; censuses; speculative bubbles; speculation; subprime crisis; home equity; interest rates; regional unemployment; house prices; regional impacts; polynomial distributed models; lag regression models; polynomial distribution; dependent variables; price indexes; unemployment rates; national unemployment; M2; economics; economic classifications; economic conditions; monetary conditions; economic indicators; economic forecasts; inflation; currency circulation; money stocks; stock variables; positive correlations; negative correlations; stock growth; business innovation; business research.

DOI: 10.1504/IJBIR.2012.047273

International Journal of Business Innovation and Research, 2012 Vol.6 No.4, pp.391 - 400

Published online: 12 Dec 2014 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article