Asymmetric Relationship Between Housing Prices and Money Demand in Iran (Quantile on Quantile Approach)

Articles in Press

Document Type : Research Paper

Authors

1 Associate Professor, Department of Economics, Economic Affairs Research Institute

2 Assistant Professor, Department of Economics, Payame Noor University, Tehran, Iran

3 Associate Professor, Department of Economics, Payame Noor University, Tehran, Iran

Abstract

In this study, the relationship between housing prices and demand for money was investigated. For this purpose, the seasonal data of the period 2013: Q1 - 2021: Q4 and the quantile on quantile estimation method were used, which is a combination of non-parametric estimation methods and quantile regression. The research results showed that the effect of housing price on money demand is symmetrical and non-linear. In fact, with the increase in housing prices, the demand for money decreases, and this decrease is more in the middle quantiles. This result confirms the negative substitution hypothesis of housing in the asset portfolio. Also, the results of the research showed that economic growth in the middle quantiles has a positive effect and in other quantiles it has a negative effect on economic growth. Regarding the effect of inflation and exchange rate on money demand, the research results showed that the effect of inflation is symmetrical, but the effect of exchange rate on money demand is asymmetrical. In other words, an increase in inflation will increase the demand for money. However, the effect of exchange rate on money demand in high quantiles of exchange rate is different from low quantiles.

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Quarterly Journal of Applied Theories of Economics

Articles in Press, Accepted Manuscript
Available Online from 16 July 2025

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