Cournot seminar – Hamed Ghiaie (ESCP)

Event details :

We are pleased to welcome to the next session of the BETA Cournot seminar organised with the support of the FSEG on Friday 09/10, at 02:00 p.m.:

Hamed Ghiaie (ESCP)

who will present his paper entitled

The Housing Deposit Channel of Monetary Policy: Theory and Evidence

Abstract: We identify the housing deposit channel of monetary policy, a new transmission mechanism through which bank market power shapes the response of the housing market to monetary policy. When the pass-through of policy-rate increases to deposit rates is incomplete, lender households substitute housing for deposits.   We formalize this mechanism in a DSGE model with imperfectly competitive banks and collateral constraints. The model predicts that greater bank market power mitigates the decline in housing prices because the housing deposit channel offsets the conventional contractionary effects of monetary policy. Consistent with this prediction, housing prices decline less after monetary tightening in US counties with greater deposit-market concentration. Complementary time-series evidence shows that the medium-run housing-price recovery is present when monetary tightening is accompanied by the deposit outflows predicted by the channel. The results show that deposit-market structure affects housing prices through household portfolio choices as well as through financial intermediation.