We analytically characterize optimal monetary policy for an augmented New Keynesian model with a housing sector. With … rational private sector expectations about housing prices and inflation, optimal monetary policy can be characterized by a … standard 'target criterion' that refers to inflation and the output gap, without making reference to housing prices. When the …

We analytically characterize optimal monetary policy for an augmented New Keynesian model with a housing sector. In a … setting where the private sector has rational expectations about future housing prices and inflation, optimal monetary policy … can be characterized without making reference to housing price developments: commitment to a "target criterion" that …