Auther
Hyunduk Suh (Department of Economics, Inha University, Email:hsuh@inha.ac.kr)
Sojung Hwang (Department of Economics, Inha University, Email:sjhwang@inha.ac.kr)
Abstract
We estimate housing policy uncertainty(HPU) in Korea, employing the economic policy uncertainty(EPU) method by Baker et al. (2016). The uncertainty index is measured by the frequency of texts in Korean newspapers that imply housing policy uncertainty during 1997-2022. The HPU index has been high in Moo-hyun Roh's and Myung-bak Lee's administrations and has risen again since 2020. Also, HPU tends to increase during large housing market policy announcements, political instability, and administrative regime change. We also analyze the effect of HPU on housing markets by estimating a vector autoregressive (VAR) model. The VAR results suggest that a rise in HPU negatively affects housing prices and residential constructions but increases housing price volatility. Meanwhile, a positive shock in the housing prices endogenously raises HPU, which suggests that uncertainty was typically more significant in policies that aim to stabilize the housing market overheating.
Keywords : housing policy, uncertainty, EPU, HPU, VAR
Link to the paper : https://drive.google.com/file/