Modelling Cyclical Divergence in the Euro Area [E-Book]: The Housing Channel / Paul van den Noord
van den Noord, Paul.
Paris : OECD Publishing, 2004
21 p. ; 21 x 29.7cm.
OECD Economics Department Working Papers ; 400
European Union
Full Text
After the launch of the single currency the euro exchange rate fell and interest rates had converged towards the (low) German level. These shocks have worked out differently for the small and large countries. Housing markets have acted as an important vehicle of transmission of these shocks onto economic activity and inflation. Simulations with a stylised econometric model for the euro area economy, making a distinction between the small and large countries in terms of the estimated parameters, illustrate this mechanism ...