00000nam 2200000za 4500 9.821807 CaOODSP 20221107143539 cr ||||||||||| 160729s2016 oncd ob f000 0 eng d CaOODSP eng eng fre n-cn--- FB3-5/2016-31E-PDF Bruneau, Gabriel. Housing market dynamics and macroprudential policy [electronic resource] / by Gabriel Bruneau, Ian Christensen and Césaire A. Meh. [Ottawa] : Bank of Canada, c2016. ii, 83 p. Staff Working Paper, 1701-9397 ; 2016-31 "July 2016." Includes bibliographical references (p. 43-48). We perform an analysis to determine how well the introduction of a countercyclical loan-to-value (LTV) ratio can reduce household indebtedness and housing price fluctuations compared with a monetary policy rule augmented with house price inflation. To this end, we construct a New Keynesian model in which a fraction of households borrow against the value of their houses and we introduce news shocks on housing demand. We estimate the model with Canadian data using Bayesian methods. We find that the introduction of news shocks can generate a housing market boom-bust cycle, the bust following unrealized expectations on housing demand. Our study also suggests that a countercyclical LTV ratio is a useful policy to reduce the spillover from the housing market to consumption, and to lean against news-driven boom-bust cycles in housing price and credit generated by expectations of future macroeconomic developments.Issued also in printed form. gccst Housing gccst Household finance gccst Monetary policy Meh, Césaire Assah, 1969- Christensen, Ian. Bank of Canada. Staff working paper (Bank of Canada) 1701-9397 ; 2016-31 (CaOODSP)9.806221 PDF 1.13 MB https://publications.gc.ca/collections/collection_2016/banque-bank-canada/FB3-5-2016-31-eng.pdf