Read the article, then provide a critical review of the article, Assignment

Read the article, then provide a critical review of the article, summarize the article and provide your critical interpretation of the article - Assignment Example Unproven recent house bubbles and low-interest rates have brought about froth in house markets and result in a financial instability. The task remains for central banks to maintain a balance between igniting another house price bubbles and a need to raise economic status from the ground. Riksbank also experienced the dilemma. Fluctuations of the house prices and their effects on real outcomes of the economy, households spending, health of financial intermediaries and the mortgage borrowing have been re-examined majorly on their sources. Macroeconomics has recently questioned the role of the housing finance and also the implication of house price and monetary policy on house price fluctuations. Data from such long history has been collected, the first covers non-financial businesses for 17 economies, disaggregated bank credit data and real estate lending. The second data covers 14 to 17 economies unearthed long-run house prices from 1870-2012. Policy trilemma of international macroeconomic is used, to provide sources of exogenous variation in domestic monetary conditions and perturbations of domestic interest rates. Also to estimate the impact of monetary conditions on real estate on house prices an instrument variable, IV strategy, was used (Jorda, Schularick & Taylor 5). Trilemma is used to identify perturbations of domestic interest rates that are unrelated to domestic economic conditions. Only one or two of the three trilemma policies will be selected, capital mobility, fixed exchange rates or monetary policy. Exogenous fluctuations effects on the link between mortgage credit price on house price busts and booms are measured using strategy IV. Trilemma when measuring exchange rates uses a base year of some country such as the U.S that does not take into consideration other economies when formulating their foreign monetary policy choices. As a result of the