Housing Markets Boom
Published in the Financial Times on August 8, 2005When housing markets boom, homeowners get rich. And the rich drive fancy cars, have expensive flat-screen televisions and go on nice holidays. At least that is the way people think it is supposed to work. But we all need somewhere to live so, while the above may be true for some, it cannot work for all of us at the same time. Economy-wide consumption should not respond to changes in property values. That the impact has been large is a problem for everyone, especially for monetary policymakers.
August 5, 2005