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LTV Ratio Regulations and House Prices in a Small Open Economy with Heterogeneous Households

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Authors
Lee, Junhee
Issue Date
2019-07
Publisher
Institute of Economic Research, Seoul National University
Citation
Seoul Journal of Economics, Vol.32 No.3, pp. 263-283
Keywords
heterogeneous household modelHouse priceLTV ratio regulationSmall open economy
Abstract
Macro-prudential regulations, such as loan-to-value (LTV) ratio ceiling, are implemented in several economies to stabilize the financial market and macro-economy, in addition to conventional

stabilization policies. This study constructs a small open economy model with heterogeneous households and house price fluctuations and examines the effects of LTV ratio regulation. Results of the model show that tightening the LTV ratio ceiling has considerable contractionary effects in a small open economy, but the effects are much smaller in a closed economy due to the general equilibrium effects of endogenous interest adjustment.
ISSN
1225-0279
Language
English
URI
http://hdl.handle.net/10371/160855
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.32 no.1/4 (2019)
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