Publication Type

Journal Article

Version

submittedVersion

Publication Date

10-2021

Abstract

Since the 2007 housing crisis in the United States, many countries have begun implementing various macroprudential policies to curb the ongoing rise in housing prices. As there is no clear consensus in the literature on the efficacy of these interventions, understanding their short-term impacts is crucial in informing future policy designs. Adapting a new econometric technique, we examine the short-term impact of home purchase restrictions in Singapore, accounting for the short panel nature of the data and the existence of dynamic, spatial, spatiotemporal, and unit-specific effects. Using quarterly housing data over 2012Q4-2014Q2, we find that public housing prices decrease by 3%–5% in the four quarters following policy implementation, but transaction volume does not change. These effects are likely driven by a decrease in the housing demand and the inelastic housing supply in the short run. We also show that models that ignore spatial and dynamic effects can overestimate policy effects.

Keywords

Purchase restrictions, Housing prices, Spatial effects, Dynamic effects, Short panels

Discipline

Econometrics

Research Areas

Econometrics; Applied Microeconomics

Publication

Economic Modelling

Volume

103

First Page

1

Last Page

17

ISSN

0264-9993

Identifier

10.1016/j.econmod.2021.105597

Publisher

Elsevier

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Included in

Econometrics Commons

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