Optimistic housing market sentiment amplifies impact of monetary policy on prices.
The study looked at how different types of monetary policies affect housing prices in the US, depending on whether people are feeling optimistic or pessimistic about the housing market. They found that when the market is optimistic, a decrease in monetary policy leads to a bigger drop in housing prices, especially with unconventional policies. This shows that people's feelings about the housing market play a big role in how effective monetary policies are in controlling housing prices.