The Negative Influence of the Tilt Effect and Lending Constraints on Housing Markets, Economic Recessions and the Phillips Curve

  title={The Negative Influence of the Tilt Effect and Lending Constraints on Housing Markets, Economic Recessions and the Phillips Curve},
  author={Xavier Barrull},
  journal={ERN: Other Macroeconomics: Prices},
  • Xavier Barrull
  • Published 2012
  • Economics
  • ERN: Other Macroeconomics: Prices
Although economic theory suggests that inflation should not have any significant influence on real housing prices and activity, inflation variations are the main drivers of housing price variability (Tsataronis and Zhu, 2004) and increases in inflation have preceded housing and economic recessions. The combination of the tilt effect (Lessard and Modigliani, 1975) and rigid lending constraints can help us understand these relationships, as well as explaining the failure of the Phillips curve in… Expand
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