Interest Rate Elasticity of Residential Housing Prices

We Examine The Interest Rate Elasticity Of Housing Prices, Advancingthe Empirical Literature In Two Directions. First, We Take A Commonly Used Cross-country Panel Dataset And Evaluate The Housing Price Equation Using A Consistent Estimator In The Presence Of Endogenous Explanatory Variables And A Lagged Dependent Variable. Second, We Carry-out A Novel Analysis Of Determinants Of Residential Housing Prices In A Cross-section Of Countries. Our Results Show That The Short-term Interest Rate, And Hence Monetary Policy, Has A Sizable Impact On Residential Housing Prices.