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House Prices and the Credit-Driven Household Demand Channel: The Case of the Irish Economy

House Prices and the Credit-Driven Household Demand Channel: The Case of the Irish Economy
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Year:    2021

Author:    Cronin, David, McQuinn, Kieran

Credit and Capital Markets – Kredit und Kapital, Vol. 54 (2021), Iss. 2 : pp. 199–221

Abstract

The performance of the Irish economy stands out across western economies over the past two decades as the later years of its “Celtic Tiger” phase gave way to a sharp and extremely large economic downturn between 2008 and 2012. This severe recession has been followed by a Lazarus-style economic recovery in recent years. This paper examines the role played by the credit-driven housing net worth channel in the path that Irish economic performance has taken between 2002 and 2019 by specific reference to developments in the domestic labour market. We find a significant positive relationship between housing net worth and employment growth in Ireland, manifesting itself through the non-traded sector of the economy between 2007 and 2012. This followed the emergence and then bursting of a substantial credit-fuelled housing market bubble in the Irish residential property market. Our analysis indicates no evident link between economic activity and a credit-driven housing net worth channel in recent years. This may reflect market and regulatory responses to the banking crisis-led recession of the late 2000s and early 2010s.

Journal Article Details

Publisher Name:    Global Science Press

Language:    English

DOI:    https://doi.org/10.3790/ccm.54.2.199

Credit and Capital Markets – Kredit und Kapital, Vol. 54 (2021), Iss. 2 : pp. 199–221

Published online:    2021-04

AMS Subject Headings:    Duncker & Humblot

Copyright:    COPYRIGHT: © Global Science Press

Pages:    23

Keywords:    Household Wealth House Prices Employment E24 E32 E44

Author Details

Cronin, David

McQuinn, Kieran

  1. Regime switching and the responsiveness of prices to supply: The case of the Irish housing market

    Egan, Paul

    McQuinn, Kieran

    The Quarterly Review of Economics and Finance, Vol. 87 (2023), Iss. P.82

    https://doi.org/10.1016/j.qref.2022.12.001 [Citations: 1]

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Section Title Page Action Price
David Cronin / Kieran McQuinn: House Prices and the Credit-Driven Household Demand Channel: The Case of the Irish Economy 1
Abstract 1
I. Introduction 1
II. The Irish Housing and Credit Market: A Brief Review 4
III. The Sustainability of Irish House Price Levels Over Time 8
IV. Housing Net Wealth and the Labour Market in Ireland 1
V. Conclusion 1