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HOUSING MARKETS AND THE GLOBAL FINANCIAL CRISIS: THE COMPLEX DYNAMICS OF A CREDIT SHOCK
Author(s) -
Grimes Arthur,
Hyland Sean
Publication year - 2015
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12070
Subject(s) - shock (circulatory) , financial crisis , economics , house price , supply shock , monetary economics , financial market , outcome (game theory) , dynamics (music) , variable (mathematics) , finance , macroeconomics , monetary policy , microeconomics , medicine , physics , acoustics , mathematical analysis , mathematics
We analyze the multiple channels of influence that global financial crisis‐induced credit restrictions had on New Zealand's subnational housing markets. The dynamics caused by the credit shock are compared to those caused by a migration shock, a more common form of housing shock in New Zealand. We focus on the impacts on two outcome variables, house prices and housing supply, within a structural time series model of regional housing markets. Both shocks cause substantial and prolonged cyclical adjustments in each variable. Similar cyclical dynamics could complicate the conduct of macroprudential policies designed to affect bank credit allocation . ( JEL E32, E44, R21)