Housing market dynamics in a small open economy: Do external and news shocks matter?

Chi Yung NG*, Ning Feng

*Corresponding author for this work

    Research output: Contribution to journalJournal articlepeer-review

    14 Citations (Scopus)


    We study the sources of fluctuations in the housing market of a small open economy. We use an estimated dynamic stochastic general equilibrium (DSGE) model and data from seven small open economies to assess the quantitative effects of both contemporaneous and news shocks to domestic and external fundamentals on housing market dynamics. External shocks and news shocks have significant effects. Cyclical fluctuations in housing prices and housing investment are mainly driven by contemporaneous shocks related to foreign housing preferences and terms of trade, and by news shocks related to domestic consumption-goods technology, housing preferences and terms of trade. The spillover effects of external shocks on housing prices are notably larger than those of domestic shocks.

    Original languageEnglish
    Pages (from-to)64-88
    Number of pages25
    JournalJournal of International Money and Finance
    Publication statusPublished - 1 May 2016

    Scopus Subject Areas

    • Finance
    • Economics and Econometrics

    User-Defined Keywords

    • E32
    • E44
    • External shocks
    • F41
    • Housing investment
    • Housing market dynamics
    • Housing price
    • News shocks
    • R31
    • Small open economy


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