HOUSING PRICES IN BRAZIL AND THEIR IMPACTS ON INTEREST RATE AND INCOME IN THE INFLATION TARGETING REGIME BETWEEN 2007 AND 2017

Resumo

This paper aims to assess housing prices' impact on economic growth and the basic interest rate under the inflation targeting regime between 2007 and 2017. To measure these effects, we used the method of Vector Error Correction (VEC) and the monetary transmission model by Bogdanski et al. (2000). Thus, the behavior of the model's endogenous variables (housing IPCA, Brazilian policy interest rate (Selic), Output Gap, and Exchange rate) was observed through the impulse response function and variance decomposition. With the estimated model, it was possible to identify that the Broad Consumer Price Index (IPCA) significantly influences the Selic variations. However, the housing IPCA does not respond to Selic shocks, which leads to the idea that there is an inertial component in Brazilian inflation, and this corroborates for the maintenance of high interest rates in the country in the analyzed period.