Spain and the crisis: housing prices, credit, and macroprudential policies
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,...
| Main Authors: | , |
|---|---|
| Format: | Article |
| Published: |
World Scientific Publishing
2017
|
| Subjects: | |
| Online Access: | https://eprints.nottingham.ac.uk/30291/ |
| _version_ | 1848793957176180736 |
|---|---|
| author | Rubio, Margarita Carrasco-Gallego, José A. |
| author_facet | Rubio, Margarita Carrasco-Gallego, José A. |
| author_sort | Rubio, Margarita |
| building | Nottingham Research Data Repository |
| collection | Online Access |
| description | 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. |
| first_indexed | 2025-11-14T19:08:33Z |
| format | Article |
| id | nottingham-30291 |
| institution | University of Nottingham Malaysia Campus |
| institution_category | Local University |
| last_indexed | 2025-11-14T19:08:33Z |
| publishDate | 2017 |
| publisher | World Scientific Publishing |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | nottingham-302912020-05-04T19:58:28Z https://eprints.nottingham.ac.uk/30291/ Spain and the crisis: housing prices, credit, and macroprudential policies Rubio, Margarita Carrasco-Gallego, José A. 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. World Scientific Publishing 2017-03 Article PeerReviewed Rubio, Margarita and Carrasco-Gallego, José A. (2017) Spain and the crisis: housing prices, credit, and macroprudential policies. Singapore Economic Review, 62 (1). pp. 109-133. ISSN 1793-6837 Housing Boom House Prices Macroprudential Policy Dynamic Provisioning http://www.worldscientific.com/doi/abs/10.1142/S0217590817400057 doi:10.1142/S0217590817400057 doi:10.1142/S0217590817400057 |
| spellingShingle | Housing Boom House Prices Macroprudential Policy Dynamic Provisioning Rubio, Margarita Carrasco-Gallego, José A. Spain and the crisis: housing prices, credit, and macroprudential policies |
| title | Spain and the crisis: housing prices, credit, and macroprudential policies |
| title_full | Spain and the crisis: housing prices, credit, and macroprudential policies |
| title_fullStr | Spain and the crisis: housing prices, credit, and macroprudential policies |
| title_full_unstemmed | Spain and the crisis: housing prices, credit, and macroprudential policies |
| title_short | Spain and the crisis: housing prices, credit, and macroprudential policies |
| title_sort | spain and the crisis: housing prices, credit, and macroprudential policies |
| topic | Housing Boom House Prices Macroprudential Policy Dynamic Provisioning |
| url | https://eprints.nottingham.ac.uk/30291/ https://eprints.nottingham.ac.uk/30291/ https://eprints.nottingham.ac.uk/30291/ |