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- Title
The role of market imperfections in the relationship between housing prices and household credit: Evidence from Taiwan.
- Authors
Wei, An‐Pin; Huang, Wei‐Ling; Yang, Chih‐Yuan; Chen, Ming‐Chi
- Abstract
Given the credit market imperfections in Taiwan, this paper examines the threshold effects in the adjustment towards the long-run equilibrium relationship between housing prices and household credit. The empirical findings verify the potential for regime shifts in the dynamically adjusted relationship between housing prices and household credit. Only when the benefits cover the cost of market imperfections, do housing and credit markets trigger convergence to their long-run equilibrium. The hidden effect of the limitations on housing and credit markets is to raise the thresholds of the self-adjustment mechanisms. As a result, economic boom-bust cycles will be more severe and increase the fragility of financial sectors.
- Subjects
TAIWAN; HOME prices; FINANCIAL services industry; INCOME; GROSS domestic product
- Publication
Asian-Pacific Economic Literature, 2013, Vol 27, Issue 2, p131
- ISSN
0818-9935
- Publication type
Article
- DOI
10.1111/apel.12022