TY - JOUR
T1 - Spain and the crisis
T2 - housing prices, credit, and macroprudential policies
AU - Rubio, Margarita
AU - Carrasco-Gallego, Jose
N1 - EMBARGO 12 MTHS
Electronic version of an article published as Singapore Economic Review, Volume, Issue, 2016, pp. , DOI: 10.1142/S0217590817400057 © [copyright World Scientific Publishing Company] http://www.worldscientific.com/doi/abs/10.1142/S0217590817400057
PY - 2017/3
Y1 - 2017/3
N2 - In this paper, we propose a two-country, two sector monetary union DSGE model with housing. One of the countries is calibrated to represent the Spanish economy while the other one is the rest of the European monetary union. First, we illustrate how looser credit conditions coming from the Euro area, together with increases in housing demand, lead to an increase in house prices and credit in Spain. Then, we analyze to what extent, macroprudential policies could have avoided the excess in credit that triggered the financial crisis in Spain. We .find that a countercyclical loan-to-value rule that mainly responds to house prices would have mitigated the credit boom in Spain. These results can also be applied to other countries facing similar problems in the housing sector and thinking about implementing macroprudential policies.
AB - In this paper, we propose a two-country, two sector monetary union DSGE model with housing. One of the countries is calibrated to represent the Spanish economy while the other one is the rest of the European monetary union. First, we illustrate how looser credit conditions coming from the Euro area, together with increases in housing demand, lead to an increase in house prices and credit in Spain. Then, we analyze to what extent, macroprudential policies could have avoided the excess in credit that triggered the financial crisis in Spain. We .find that a countercyclical loan-to-value rule that mainly responds to house prices would have mitigated the credit boom in Spain. These results can also be applied to other countries facing similar problems in the housing sector and thinking about implementing macroprudential policies.
KW - WNU
KW - Housing boom
KW - house prices
KW - macroprudential policy
KW - dynamic provisioning
U2 - 10.1142/S0217590817400057
DO - 10.1142/S0217590817400057
M3 - Article
SN - 0217-5908
VL - 62
SP - 109
EP - 133
JO - Singapore Economic Review
JF - Singapore Economic Review
IS - 1
ER -