An Econometric Approach to Assess the Impact of Negative Interest Rate Policy (NIRP) on Real Estate Price Inflation in the Eurozone

Bassam Hamdar; Yaman Skheita; Mohammad Bassam Hamdar

doi:doi:10.11648/j.eco.20221101.17

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An Econometric Approach to Assess the Impact of Negative Interest Rate Policy (NIRP) on Real Estate Price Inflation in the Eurozone

Bassam Hamdar, Yaman Skheita, Mohammad Bassam Hamdar

Published in Economics (Volume 11, Issue 1)

Received: 2 February 2022 Accepted: 25 February 2022 Published: 9 March 2022

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Abstract

Contemporary economists argue that negative interest rate as an unconventional monetary policy helps stimulate economic growth. The European Central Bank (ECB) entered Negative Interest Rate Policy (NIRP) territory in June 2014, when it lowered its deposit rates to below zero levels, making it the first major central bank to adopt such policy. In contrast, NIRP can have negative effects on certain economic sectors, such as the property and housing. This paper highlights the effects of negative policy rates on the real estate price inflation inside the Eurozone. The relationship between house price index, negative policy rates, government deficit, unemployment rate, and nominal unit labor cost is addressed and analyzed. Two main hypotheses were adopted i.e., to determine the direct relationship between the Deposit Interest Rate and the House Price Index, and the indirect relationship between the Deposit Interest Rate and the House Price. Furthermore, an econometric model is utilized to sort out the impact of NIRP on the real-estate price inflation in the Eurozone. The outcome of the model shows a strong relationship between negative policy rates and house price index, with government deficit, unemployment rate, and nominal unit labor cost acting as confounding variables.

Published in	Economics (Volume 11, Issue 1)
DOI	10.11648/j.eco.20221101.17
Page(s)	49-68
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2022. Published by Science Publishing Group

Keywords

NIRP, Real Estate Sector, Price Inflation, Eurozone, Econometric Approach

References

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Bassam Hamdar, Yaman Skheita, Mohammad Bassam Hamdar. (2022). An Econometric Approach to Assess the Impact of Negative Interest Rate Policy (NIRP) on Real Estate Price Inflation in the Eurozone. Economics, 11(1), 49-68. https://doi.org/10.11648/j.eco.20221101.17

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Bassam Hamdar; Yaman Skheita; Mohammad Bassam Hamdar. An Econometric Approach to Assess the Impact of Negative Interest Rate Policy (NIRP) on Real Estate Price Inflation in the Eurozone. Economics. 2022, 11(1), 49-68. doi: 10.11648/j.eco.20221101.17

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AMA Style

Bassam Hamdar, Yaman Skheita, Mohammad Bassam Hamdar. An Econometric Approach to Assess the Impact of Negative Interest Rate Policy (NIRP) on Real Estate Price Inflation in the Eurozone. Economics. 2022;11(1):49-68. doi: 10.11648/j.eco.20221101.17

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@article{10.11648/j.eco.20221101.17,
  author = {Bassam Hamdar and Yaman Skheita and Mohammad Bassam Hamdar},
  title = {An Econometric Approach to Assess the Impact of Negative Interest Rate Policy (NIRP) on Real Estate Price Inflation in the Eurozone},
  journal = {Economics},
  volume = {11},
  number = {1},
  pages = {49-68},
  doi = {10.11648/j.eco.20221101.17},
  url = {https://doi.org/10.11648/j.eco.20221101.17},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.eco.20221101.17},
  abstract = {Contemporary economists argue that negative interest rate as an unconventional monetary policy helps stimulate economic growth. The European Central Bank (ECB) entered Negative Interest Rate Policy (NIRP) territory in June 2014, when it lowered its deposit rates to below zero levels, making it the first major central bank to adopt such policy. In contrast, NIRP can have negative effects on certain economic sectors, such as the property and housing. This paper highlights the effects of negative policy rates on the real estate price inflation inside the Eurozone. The relationship between house price index, negative policy rates, government deficit, unemployment rate, and nominal unit labor cost is addressed and analyzed. Two main hypotheses were adopted i.e., to determine the direct relationship between the Deposit Interest Rate and the House Price Index, and the indirect relationship between the Deposit Interest Rate and the House Price. Furthermore, an econometric model is utilized to sort out the impact of NIRP on the real-estate price inflation in the Eurozone. The outcome of the model shows a strong relationship between negative policy rates and house price index, with government deficit, unemployment rate, and nominal unit labor cost acting as confounding variables.},
 year = {2022}
}

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TY  - JOUR
T1  - An Econometric Approach to Assess the Impact of Negative Interest Rate Policy (NIRP) on Real Estate Price Inflation in the Eurozone
AU  - Bassam Hamdar
AU  - Yaman Skheita
AU  - Mohammad Bassam Hamdar
Y1  - 2022/03/09
PY  - 2022
N1  - https://doi.org/10.11648/j.eco.20221101.17
DO  - 10.11648/j.eco.20221101.17
T2  - Economics
JF  - Economics
JO  - Economics
SP  - 49
EP  - 68
PB  - Science Publishing Group
SN  - 2376-6603
UR  - https://doi.org/10.11648/j.eco.20221101.17
AB  - Contemporary economists argue that negative interest rate as an unconventional monetary policy helps stimulate economic growth. The European Central Bank (ECB) entered Negative Interest Rate Policy (NIRP) territory in June 2014, when it lowered its deposit rates to below zero levels, making it the first major central bank to adopt such policy. In contrast, NIRP can have negative effects on certain economic sectors, such as the property and housing. This paper highlights the effects of negative policy rates on the real estate price inflation inside the Eurozone. The relationship between house price index, negative policy rates, government deficit, unemployment rate, and nominal unit labor cost is addressed and analyzed. Two main hypotheses were adopted i.e., to determine the direct relationship between the Deposit Interest Rate and the House Price Index, and the indirect relationship between the Deposit Interest Rate and the House Price. Furthermore, an econometric model is utilized to sort out the impact of NIRP on the real-estate price inflation in the Eurozone. The outcome of the model shows a strong relationship between negative policy rates and house price index, with government deficit, unemployment rate, and nominal unit labor cost acting as confounding variables.
VL  - 11
IS  - 1
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Author Information

Bassam Hamdar

Department of Economics and Finance, Faculty of Business Administration, Al Maaref University, Beirut, Lebanon
Yaman Skheita

Faculty of Business and Economics, MBA program, American University of Science and Technology, Beirut, Lebanon
Mohammad Bassam Hamdar

Suliman S. Olayan School of Business, Research Assistant, American University of Beirut, Beirut, Lebanon

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Bassam Hamdar, Yaman Skheita, Mohammad Bassam Hamdar. (2022). An Econometric Approach to Assess the Impact of Negative Interest Rate Policy (NIRP) on Real Estate Price Inflation in the Eurozone. Economics, 11(1), 49-68. https://doi.org/10.11648/j.eco.20221101.17

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Bassam Hamdar; Yaman Skheita; Mohammad Bassam Hamdar. An Econometric Approach to Assess the Impact of Negative Interest Rate Policy (NIRP) on Real Estate Price Inflation in the Eurozone. Economics. 2022, 11(1), 49-68. doi: 10.11648/j.eco.20221101.17

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Bassam Hamdar, Yaman Skheita, Mohammad Bassam Hamdar. An Econometric Approach to Assess the Impact of Negative Interest Rate Policy (NIRP) on Real Estate Price Inflation in the Eurozone. Economics. 2022;11(1):49-68. doi: 10.11648/j.eco.20221101.17

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@article{10.11648/j.eco.20221101.17,
  author = {Bassam Hamdar and Yaman Skheita and Mohammad Bassam Hamdar},
  title = {An Econometric Approach to Assess the Impact of Negative Interest Rate Policy (NIRP) on Real Estate Price Inflation in the Eurozone},
  journal = {Economics},
  volume = {11},
  number = {1},
  pages = {49-68},
  doi = {10.11648/j.eco.20221101.17},
  url = {https://doi.org/10.11648/j.eco.20221101.17},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.eco.20221101.17},
  abstract = {Contemporary economists argue that negative interest rate as an unconventional monetary policy helps stimulate economic growth. The European Central Bank (ECB) entered Negative Interest Rate Policy (NIRP) territory in June 2014, when it lowered its deposit rates to below zero levels, making it the first major central bank to adopt such policy. In contrast, NIRP can have negative effects on certain economic sectors, such as the property and housing. This paper highlights the effects of negative policy rates on the real estate price inflation inside the Eurozone. The relationship between house price index, negative policy rates, government deficit, unemployment rate, and nominal unit labor cost is addressed and analyzed. Two main hypotheses were adopted i.e., to determine the direct relationship between the Deposit Interest Rate and the House Price Index, and the indirect relationship between the Deposit Interest Rate and the House Price. Furthermore, an econometric model is utilized to sort out the impact of NIRP on the real-estate price inflation in the Eurozone. The outcome of the model shows a strong relationship between negative policy rates and house price index, with government deficit, unemployment rate, and nominal unit labor cost acting as confounding variables.},
 year = {2022}
}

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TY  - JOUR
T1  - An Econometric Approach to Assess the Impact of Negative Interest Rate Policy (NIRP) on Real Estate Price Inflation in the Eurozone
AU  - Bassam Hamdar
AU  - Yaman Skheita
AU  - Mohammad Bassam Hamdar
Y1  - 2022/03/09
PY  - 2022
N1  - https://doi.org/10.11648/j.eco.20221101.17
DO  - 10.11648/j.eco.20221101.17
T2  - Economics
JF  - Economics
JO  - Economics
SP  - 49
EP  - 68
PB  - Science Publishing Group
SN  - 2376-6603
UR  - https://doi.org/10.11648/j.eco.20221101.17
AB  - Contemporary economists argue that negative interest rate as an unconventional monetary policy helps stimulate economic growth. The European Central Bank (ECB) entered Negative Interest Rate Policy (NIRP) territory in June 2014, when it lowered its deposit rates to below zero levels, making it the first major central bank to adopt such policy. In contrast, NIRP can have negative effects on certain economic sectors, such as the property and housing. This paper highlights the effects of negative policy rates on the real estate price inflation inside the Eurozone. The relationship between house price index, negative policy rates, government deficit, unemployment rate, and nominal unit labor cost is addressed and analyzed. Two main hypotheses were adopted i.e., to determine the direct relationship between the Deposit Interest Rate and the House Price Index, and the indirect relationship between the Deposit Interest Rate and the House Price. Furthermore, an econometric model is utilized to sort out the impact of NIRP on the real-estate price inflation in the Eurozone. The outcome of the model shows a strong relationship between negative policy rates and house price index, with government deficit, unemployment rate, and nominal unit labor cost acting as confounding variables.
VL  - 11
IS  - 1
ER  -

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