Three Current Policy Issues

摘要

This chapter consists of three essays on current policy issues: the global house price boom, the experience with greater exchange rate flexibility in emerging market countries, and fiscal policy in euro area countries. House prices in many industrial countries have increased unusually rapidly in recent years and in some cases these increases do not seem to be fully explained by economic fundamentals. More importantly, the analysis in the first essay shows that, even though housing is not traded, house prices are highly synchronized across industrial countries. Specifically, a large share (about 40 percent on average) of house price movements is due to global factors, which reflect global co-movements in interest rates, economic activity, and other macroeconomic variables, which in turn result from common underlying shocks. A key implication of this finding is that, just as the upswing in house prices has been a global phenomenon, it is likely that any downturn would also be highly synchronized, with corresponding implications for global economic activity.