The Effect of Monetary Policy on House Prices during the Covid-19 Pandemic in Norway

Abstract

This thesis investigates the impact of monetary policy on the housing market in Norway over the past twenty years, paying particular attention to changes in the transmission of the policy rate to house prices during the Covid-19 pandemic. We also consider the effect of mobility and consumption restrictions associated with the pandemic on this transmission, as well as changes in household consumption, credit, and saving during the pandemic to give context to the decisions made by households regarding investment in housing. We employ local projections with rolling sample windows to compensate for the short time span of the pandemic. Our results indicate that the response of house prices to the policy rate in Norway was stronger during the Covid-19 pandemic relative to normal times and to o