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@article{5710, author = {Stroukal, Dominik and Kadeřábková, Božena}, article_location = {Prague}, article_number = {4}, doi = {http://dx.doi.org/10.14311/CEJ.2016.04.0020}, keywords = {Negative interest rate; transmission mechanism; housing market; business cycle}, language = {eng}, issn = {1805-2576}, journal = {Civic Engineering Journal}, note = {AR 2016/2017 - odesláno do RIV. (duben 2017)}, title = {Negative Interest Rates and Housing Bubbles}, url = {http://www.civilengineeringjournal.cz/archive/issues/2016/2016_4/4-2016-0020.pdf}, volume = {2016}, year = {2016} }
TY - JOUR ID - 5710 AU - Stroukal, Dominik - Kadeřábková, Božena PY - 2016 TI - Negative Interest Rates and Housing Bubbles JF - Civic Engineering Journal VL - 2016 IS - 4 SP - 1-8 EP - 1-8 PB - Faculty of Civil Engineering, CTU in Prague SN - 18052576 N1 - AR 2016/2017 - odesláno do RIV. (duben 2017) KW - Negative interest rate KW - transmission mechanism KW - housing market KW - business cycle UR - http://www.civilengineeringjournal.cz/archive/issues/2016/2016_4/4-2016-0020.pdf L2 - http://www.civilengineeringjournal.cz/archive/issues/2016/2016_4/4-2016-0020.pdf N2 - In years after the financial crisis economists started to propose negative interest rates as a way how to escape from a liquidity trap. Negative interest rate was considered to be impossible but few countries have already set them below the lower zero bound. However, it has been done only in the central banks but not in the commercial banks. The main thesis of this paper is that low interest rates can inflate a housing bubble and as a result negative interest rates would only inflate it more. First, proposals how to make interest rate negative even in commercial banking are presented in the paper. Then we discuss general consequences of negative interest rates such as redistribution, initiation of a business cycle and most importantly, inflation. Finally, we look at the housing market and present theoretical and some empirical evidence of a possible ongoing bubble. The theory suggests that the negative interest rate would inflate the bubble necessarily. Consequences of a later decrease of housing prices have to be taken into account whenever negative interest rates are proposed. ER -
STROUKAL, Dominik and Božena KADEŘÁBKOVÁ. Negative Interest Rates and Housing Bubbles. \textit{Civic Engineering Journal}. Prague: Faculty of Civil Engineering, CTU in Prague, 2016, vol.~2016, No~4, p.~1-8. ISSN~1805-2576. Available from: https://dx.doi.org/10.14311/CEJ.2016.04.0020.
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