Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/277111 
Authors: 
Year of Publication: 
2007
Citation: 
[Journal:] Intervention. Zeitschrift fuer ├ľkonomie / Journal of Economics [ISSN:] 2195-3376 [Volume:] 04 [Issue:] 2 [Year:] 2007 [Pages:] 331-351
Publisher: 
Metropolis-Verlag, Marburg
Abstract: 
Can monetary policy prevent real estate bubbles from harming economic welfare? The European Central Bank (ECB) has to conduct monetary policy for the Euro area as a whole, but her policy affects countries with rapidly rising house prices (e.g. Spain) in a markedly different way than those with stagnating house prices (like Germany). For opposing divergent real estate price developments within the European Monetary Union (EMU), interest rate policy is not the appropriate instrument; whereas "fine tuning" may be possible with the help of asset-based reserve requirements. All financial institutions would be forced to deposit them at the ECB (as a percentage of asset holdings). Reserve rates are free to vary between countries. Therefore, rates should be highest in those countries where appropriate indicators signal a house price bubble.
Subjects: 
monetary policy
real estate prices
Tobin's Q
minimum reserve policy
financial stability
JEL: 
E44
E52
G18
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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