Loading...
Homeownership, Informality and the Transmission of Monetary Policy
Uras,R.B. Elgin,C.
Uras,R.B.
Elgin,C.
Abstract
Cross-country aggregate data exhibits a strong (positive) relationship between the size of the informal employment and aggregate homeownership rates. We investigate this empirical observation using a cash-in-advance model with housing markets and argue that the rate of inflation is important in explaining the nexus between informality and homeownership rates. Specifically, we uncover a novel monetary transmission mechanism and show that households with informal employment desire to economize on their short-term cash usage and avoid periodic rental payments when (i) informality is associated with constrained business investment finance, and (ii) inflation expectations are high. Our empirical and theoretical findings highlight an important interaction between the conduct of monetary policy and the performance of housing markets.
Description
Date
2014-08-27
Journal Title
Journal ISSN
Volume Title
Publisher
Economics
Files
Loading...
2014_045.pdf
Adobe PDF, 412.88 KB
Research Projects
Organizational Units
Journal Issue
Keywords
Cash-In-Advance,, Informality, Cross-Country Data;, Monetary Transmission., E26 - Informal Economy ; Underground Economy, E41 - Demand for Money, E44 - Financial Markets and the Macroeconomy, SDG 8 - Decent Work and Economic Growth, SDG 11 - Sustainable Cities and Communities, SDG 17 - Partnerships for the Goals
Citation
Uras, R B & Elgin, C 2014 'Homeownership, Informality and the Transmission of Monetary Policy' CentER Discussion Paper, vol. 2014-045, Economics, Tilburg, pp. 1-26.