The Macroeconomic Effects of Monetary & Fiscal Policy shocks on Danish Housing Prices and Private Consumption: A Stock-Flow Consistent Approach
Author
Schiellerup, Morten Skov
Term
4. term
Education
Publication year
2026
Submitted on
2026-05-31
Pages
45
Abstract
This thesis examines how monetary and fiscal policy shocks transmit to Danish private consumption and house prices using a Stock-Flow Consistent (SFC) model. The aim is not to forecast outcomes but to clarify the mechanisms through which interest rate changes and higher public spending affect households, firms, banks, and the government, with a particular focus on the housing market. The model is a small closed economy with four sectors, estimated on quarterly data for 2010–2024, and includes behavioral equations for private consumption, house prices, housing investment, and firm investment, enabling a coherent analysis of income flows, debt, wealth, and financial holdings. Three scenarios are analyzed: an expansionary fiscal shock, a contractionary monetary shock, and a combined policy mix. The results indicate that tighter monetary policy reduces consumption and house prices via lower disposable income, higher interest payments, weaker loan demand, and tighter lending conditions. In contrast, higher public consumption stimulates activity by strengthening income flows and output, indirectly supporting consumption, house prices, and investment. In the policy mix, expansionary fiscal policy can offset some, but not all, of the contractionary monetary effects. The thesis concludes that transmission to consumption and house prices is best understood as an interaction between real and financial channels, arising from the joint dynamics of income, debt, wealth, interest payments, aggregate demand, and sectoral balances.
Dette speciale undersøger, hvordan pengepolitiske og finanspolitiske chok forplanter sig til dansk privatforbrug og huspriser i en Stock-Flow Consistent (SFC) model. Formålet er ikke at forudsige udviklingen, men at belyse de mekanismer, gennem hvilke renteændringer og øget offentligt forbrug påvirker husholdninger, virksomheder, banker og staten med særligt fokus på boligmarkedet. Modellen er opbygget som en lille, lukket økonomi med fire sektorer og er estimeret på kvartalsdata for perioden 2010–2024. Den indeholder adfærdsligninger for privatforbrug, huspriser, boliginvesteringer og virksomhedsinvesteringer, hvilket muliggør en sammenhængende analyse af indkomststrømme, gæld, formue og finansielle beholdninger. Tre scenarier analyseres: et ekspansivt finanspolitisk chok, et kontraktivt pengepolitisk chok og et kombineret policy-mix. Resultaterne viser, at strammere pengepolitik dæmper privatforbrug og huspriser via lavere disponibel indkomst, højere renteudgifter, svagere låneefterspørgsel og strammere kreditvilkår. Omvendt løfter øget offentligt forbrug aktiviteten gennem stærkere indkomststrømme og output, hvilket indirekte styrker forbrug, huspriser og investeringer. I policy-mixet kan ekspansiv finanspolitik afbøde nogle af de negative effekter fra kontraktiv pengepolitik, men ikke fuldt ud neutralisere dem. Specialet konkluderer, at transmissionen fra politik til forbrug og huspriser bedst forstås som et samspil mellem reale og finansielle kanaler, hvor effekterne udspringer af den samlede dynamik mellem indkomst, gæld, formue, renteudgifter, samlet efterspørgsel og sektorbalancer.
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