What the study found
The study found that housing markets are a central channel through which monetary policy shocks affect the real economy in twelve European countries. Real house prices showed the largest and most lasting responses, stronger than output and general price levels.
Why the authors say this matters
The authors conclude that housing dynamics should be more systematically included in monetary and macroprudential policy frameworks. The study suggests this is especially relevant because of vulnerabilities linked to ultra-low interest rates and money supply expansions.
What the researchers tested
The researchers examined how monetary policy affects real output, inflation, and housing markets across twelve European countries from 1995Q1 to 2025Q2. They used a pooled panel Vector Autoregression model with sign restrictions to identify the effects of interest rate shocks, money supply (M3) shocks, and a combined policy mix.
What worked and what didn't
The results showed that housing markets responded strongly to monetary policy shocks, with real house prices showing the most significant and enduring effects. The analysis also found asymmetries: contractionary shocks had larger and longer-lasting effects than expansionary shocks, especially in housing.
What to keep in mind
The summary does not describe specific country-by-country differences or other limitations beyond the study's scope. The findings are based on twelve European countries and the period 1995Q1-2025Q2.
Key points
- Housing markets were identified as a central channel for monetary policy transmission.
- Real house prices reacted more strongly and persistently than output or general price levels.
- Contractionary monetary shocks had larger and longer-lasting effects than expansionary shocks.
- The study used a pooled panel Vector Autoregression model with sign restrictions.
- The authors call for housing dynamics to be integrated into monetary and macroprudential policy.
Disclosure
- Research title:
- Housing markets amplify monetary policy effects in Europe
- Authors:
- Daniel Rodríguez-Asensio, Ana M. López-García
- Institutions:
- Universidad Autónoma de Madrid, Universidad Autónoma de Madrid
- Publication date:
- 2026-03-03
- OpenAlex record:
- View
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