Includes bibliographical references (p. 211-224) and index.

1. House prices and the macroeconomy : overview -- 2. House prices as predictors of consumer price inflation? -- 3. Financial conditions indices -- 4. The Phillips curve, the IS curve, and monetary transmission -- 5. Goods and asset price deflations -- 6. House prices and bank credit -- 7. Bank regulation and macroeconomic fluctuations -- 8. Default, credit growth and asset prices -- 9. What role for house prices in the measurement of inflation? -- 10. A second Central Bank instrument? -- 11. House price fluctuations and public policy.

"House price bubbles, and their aftermath, have become a focus of macro-economic policy concern in most developed countries. This book elucidates the two-way relationship between house-price fluctuations and economic fundamentals. Housing has many features which make it distinct from other assets, like equity. Real estate is not only an asset but also a durable consumption good for households, providing shelter and other housing services. As a result, a house is often the largest and most important asset of households and therefore accounts for a major share of household wealth. Similarly a large share of bank assets is tied to housing values. House price fluctuations may, therefore, have a major effect on economic activity and the soundness of the financial system. Following an introductory chapter, the book is structured into three parts. The first demonstrates the importance of house prices as determinants or indicators of inflation and economic activity. The second focuses on the inter-relationships between bank credit extension and housing prices, and how bubbles can lead to financial crises. The third discusses resultant public policy issues, such as whether, and how, to include housing prices in a general inflation index, and how to restrain the housing/bank credit cycle." -- Book jacket.