. The model suggests that simultaneous boom-bust cycles in house prices, output, investment, consumption and hours worked … nominal policy interest rate and the CPI inflation rate decline during housing booms and rise as house prices fall. These … demonstrate that stronger policy responses to inflation amplify housing-market boom-bust cycles. Also, higher loan-to-value ratios …

We study a model with repeated moral hazard where financial contracts are not fully indexed to inflation because … indexed to the nominal price and, as a result, their investment is more sensitive to nominal price shocks. We also find that … investment and output respond to a lesser degree. -- Economic models ; Monetary policy framework ; Financial markets …

are already high. By contrast, upward pressures on output (and perhaps also on inflation) should lead to decreases in …, responding to future inflation, rather than the current rate, does not generate significant welfare improvements. While some of … should lower rates when output or inflation is pushing upward is more specific to limited-participation models. This …

aggregate investment, and are important determinants of the propagation of shocks. The authors find that the effects of monetary …

rule that stabilizes output and inflation in an environment where endogenous boom-bust cycles in house prices can occur … borrowers are occasionally over-optimistic, the central bank should be less responsive to inflation, more responsive to output …-bust cycles in house prices, but prolongs inflation target horizons due to weak policy reactions to inflation fluctuations after …

We study a model with repeated moral hazard where financial contracts are not fully indexed to inflation because … indexed to the nominal price and, as a result, their investment is more sensitive to nominal price shocks. We also find that … investment and output respond to a lesser degree. …