A Study of the Effect of Energy Price on House Price in Iran

Authors

Abstract

The objective of this research is to study the effect of energy price on the prices of houses in Iran. Accordingly, based on Breitenfellner et al. mode (2015) l and through the deployment of Johansen- Juselius method, the writers have examined this issue from the first quarter of 2006 to the fourth quarter of 2014. The research results indicate that the coefficient of all variables of the model have been as the expected theoretical principles and energy price has a significant and negative impact on house price. Accordingly, since the financial market and monetary policy function as the channels through which energy price affect housing price and financial markets play roles in absorbing the liquidity of speculators, it is recommended that economic planners attempt to strengthen the markets and reform the public culture to pay more notice to investing in financial assets rather than buying real states and, thus, increase energy price and inflation. In other words, by absorbing the liquidity of speculators, a step is taken toward controlling house price. Also, it is recommended that Central Bank pay more attention to the selection of right tools to implement monetary policies to deploy correct monetary policy at time of an increase in energy price and inflation to control house price.

Keywords


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