This paper studies the optimal interest rate rule in a DSGE model with housing market spillovers (Iacoviello and Neri, 2010). We find that the optimal rule responds to house price inflation even when the stabilization of house price is not among the objectives of the policymaker, and that the...

We apply the linearized present value model, which allows the log rent-price ratio to be decomposed into the expected present value of all future real interests rates, real housing premia, and real rent growth, to the housing market in 23 U.S. metropolitan areas from 1978 to 2011. Based on the...

The slope of the yield curve has long been found to be a useful predictor of future economic activity, but the relationship is unstable. One change we have identified in this paper is that, starting from the 1990s, movements at the long end of the yield curve have an increase in predictive...