The earlier concern was sparked by a paper by Mankiw and Weil (1989), in which the authors famously predicted that between 1987 and 2007, real house prices could fall by 3% per year. In fact, real house prices grew by an average of 31/2% per year from 1987 to 2004. Of course, the MankiwWeil prediction may yet come to pass; or it may have already occurred and simply been masked by the surge in d...

The greater use of microeconomic and survey based data in addressing key financial stability related questions is a natural outcome of the recent financial crisis. Amongst other benefits, the use of such data enables a more precise understanding of the differing attitudes and responses of individual agents such as households to financial shocks. However, some difficulties can arise with the use...

Financial deregulation can help rationalize the negative correlation between house prices and current account balance observed in the United States and in several other countries that have experienced the highest degree of turmoil during the recent financial crisis. Lower collateral requirements facilitate access to external funding and increase the demand for consumption and housing. As a cons...

Over much of the past 25 years, the cycles of house price and consumption growth have been closely synchronised. Three main hypotheses for this co-movement have been proposed in the literature. First, that an increase in house prices raises households' wealth, particularly for those in a position to trade down the housing ladder, which increases their desired level of expenditure. Second, that ...

I study the effects of an increase in supply local mortgage credit on house prices by exploiting a natural experiment from Switzerland. In 2008, retail customers migrate deposits universal banks that are suffering overseas losses to homogeneous and narrowly-local banks. Using distance between two types as instrument for deposit growth, show lending, which correlates with subsequent price growth...

This paper provides an exposition of the nature, means of estimation and uses of Financial Conditions Indexes (FCIs) and their relationship to the more common Monetary Conditions Indexes (MCIs) that are used by market analysts, international organisations and central banks. Using panel datasets for Western Europe we explore how asset prices, particularly house and stock prices, can provide usef...

This paper provides an exposition of the nature, means of estimation and uses of Financial Conditions Indexes (FCIs) and their relationship to the more common Monetary Conditions Indexes (MCIs) that are used by market analysts, international organisations and central banks. Using panel datasets for Western Europe we explore how asset prices, particularly house and stock prices, can provide usef...