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- Title
House Prices, Credit and Willingness to Lend.
- Authors
CARRINGTON, SARAH; MADSEN, JAKOB B.
- Abstract
This article establishes a Tobin's q model in which house prices fluctuate around their long-run equilibrium due to fluctuations in credit availability and income. It is shown that house prices are positively related to credit in the short run, but negatively related to the availability of credit in the long run. Using survey data on banks' willingness to lend and data on disintermediation for the USA over a long period, and for eight OECD countries over a short period, it is shown that the availability of credit is the principal variable driving house prices around their long-run equilibrium.
- Subjects
UNITED States; HOME prices; MORTGAGES; INTEREST rates; BANK deposits; INVESTMENT policy
- Publication
Economic Record, 2011, Vol 87, Issue 279, p537
- ISSN
0013-0249
- Publication type
Article
- DOI
10.1111/j.1475-4932.2011.00762.x