RBNZ asks for 'theoretical and empirical papers' on housing, household debt and policy ahead of December conference

The Reserve Bank is calling for input into a conference on housing, household debt and policy it's to host in December.

"High house prices and modest income growth create significant tensions and distributional issues across generations. Elevated household debt and high house prices, combined with subdued inflation outcomes, also pose a challenge for both monetary and macro-prudential policy," the Reserve Bank says.

"We invite submission of theoretical and empirical papers that explore the dynamics of housing markets and household debt; the implications of housing cycles for the macro economy; and the consequences of those dynamics for monetary and macro-prudential policy."

The central bank and prudential regulator suggests questions of interest could include;

What drives residential investment and household mortgage choice?
How do developments in house prices affect economic inequality?
How do housing market dynamics influence consumption and saving behaviour?
How does household debt and/or leverage affect mortgage default risk and financial stability?
How does household debt influence the transmission of monetary policy?
What is the optimal mix of monetary, macro-prudential and other policies?
And should distributional considerations influence monetary and macro-prudential policymaking? 

The keynote speakers are scheduled to be Christopher Carroll from Johns Hopkins University, Greg Kaplan of the University of Chicago, and Dirk Krueger from the University of Pennsylvania.

The conference is scheduled to be held at the Reserve Bank on December 11 and 12. Those wanting to submit a paper are asked to do so by August 1 to conference2017@rbnz.govt.nz.

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11 Comments

December? Seriously? It's almost impossible to see the horse as it is, but I can help point the way to the barn door.....It's the one with 1.75% nailed to it.

I am tempted to call them something that would have David Chaston to ban me from this forum for life .

What have they been doing while this slow -moving trainwreck unfolded for the past decade and fell off the cliff in the past 36 months ?

Why take so long to get comment and empirical evidence for something that we all know is a crisis right now?

This conference should be within 8 weeks, not more than half a year from now .

... calm your good self , dear heart .... here , have a soothing Gummy Bear .... relax .... this is New Zealand ... Godzone .... everything gets taken care of eventually ... in the fullness of time , all issues will be discussed , committeed , and dealt with ... train-wrecks righted , boat men resuscitated .... houses built ...

And it'll all occur easily within our lifetimes ....

... provided someone can perfect how to keep our detached heads alive in glass carboys long after our bodies have carked out ...

..sounds a bit like the Fed...

"DiMartino Booth found a cabal of unelected academics who made decisions without the slightest understanding of the real world, just a slavish devo­tion to their theoretical models..."

http://www.penguinrandomhouse.com/books/545362/fed-up-by-danielle-dimart...

Here's a submission. Bring back the land tax that the first labour government installed.
https://en.wikipedia.org/wiki/First_Labour_Government_of_New_Zealand#Eco...

... there's quite a few of us around here who've been banging on about re-introducing a land tax for several years now ... the debate was re-ignited by some excellent articles me old mucker Bernard " Chicken Little " Hickey posted here at interest.co.nz ...

And I'd go a step further , and include all of our nation's wonderful natural resources ... land , water , air , the Canterbury Crusaders ..

Would be great to see Robert Shiller as a keynote speaker. Imagine him in a televised head-to-head debate with Steven Joyce. Gormless would take on a whole new meaning.

I have been to a Robert Shiller presentation in Chicago. He is a serious academic with a lot of insightful things to say. But he is no presentation star. I have my doubts he would shine in a public debate with any accomplished politician.

One if his more infamous moment in the public eye was when he was "ripped to pieces" in an interview with George Will. Taleb has referred to it on numerous occasions. Shiller was floundering, for all the wrong reasons.

I'd go for either Thaler or Kahneman. Joyce is an economic pygmy compared to either of them.

"High house pricecs and modest income growth create significant tensions and distributional issues across generations. Elevated household debt and high house prices, combined with subdued inflation outcomes, also pose a challenge for both monetary and macro-prudential policy," the Reserve Bank says.

Why doesn't the Government issue a cease and desist order to restrain the RBNZ from further futile attempts to raise below dictated CPI levels with lower official interest rates?

BIS clearly understands the folly of recent RBNZ monetary policy actions.

A monetary policy regime narrowly focused on controlling near-term inflation removes the need to tighten policy when financial booms take hold against the backdrop of low and stable inflation. And major positive supply side developments, such as those associated with the globalisation of the real side of the economy, provide plenty of fuel for financial booms: they raise growth potential and hence the scope for credit and asset price booms while at the same time putting downward pressure on inflation, thereby constraining the room for monetary policy tightening. Borio page 12 of 38.
And:
More importantly, the banking system does not simply transfer real resources, more or less efficiently, from one sector to another; it generates (nominal) purchasing power. Deposits are not endowments that precede loan formation; it is loans that create deposits. Money is not a “friction” but a necessary ingredient that improves over barter. And while the generation of purchasing power acts as oil for the economic machine, it can, in the process, open the door to instability, when combined with some of the previous elements. Working with better representations of monetary economies should help cast further light on the aggregate and sectoral distortions that arise in the real economy when credit creation becomes unanchored, poorly pinned down by loose perceptions of value and risks. Borio Page 17 of 38