SNB paper links low interest rates and housing bubbles

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A working paper, published by the Swiss National Bank on July 10, considers the link between low short-term interest rates and the development of house price bubbles.

The authors, Christian Hott and Terhi Jokipii, analyse house price and interest rate data for 14 OECD countries during the period 1981–2010. The paper finds interest rates that fall below the rate implied by the ‘Taylor rule' have a "strong link" with house price bubbles.

The researchers argue that policy-makers can control housing

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