Inflation Hedging and Monetary Policy in US Housing Markets

The project aims to better understand how the observed inflation hedging benefits in housing change, when inflation is under control by the government. The supervisors will guide the student to assess time-varying inflation hedging benefits in the US housing markets under different monetary environments.

Department: Real Estate & Planning

Supervised by: Dr. Pin-Te Lin and Dr. Jorn van de Wetering

The Placement Project

The project aims to understand the time-varying inflation hedging benefits in the US regional housing markets under different momentary environments. Though real estate is famous for acting as a hedge against inflation, little is known about how the hedging benefits can vary over time in different monetary environments. Motivated by inflation targeting policy discreetly adopted since 1990 in the US, this stand-alone research aims to fill this gap by utilizing regional housing price indices produced by the US Federal Housing Finance Agency through utilising two balanced subsample comparison analysis before and after the introduction of the inflation targeting. Motivated by Fogler’s (1984) argument that real estate acts as a hedge during periods of high inflation, our research hypothesises that the observed inflation hedging benefit decreases in an inflation-targeting regime. To test the hypothesis, this project attempts to use the change of monetary policies as a natural setting and empirically investigates whether the inflation hedging benefits in the US housing markets have significantly changed since the discreet implementation of inflation targeting policy in 1990. This research is of interest to individual investors and policy makers. Specifically, our research can help address whether the policy regulators can affect inflation hedging properties in housing via monetary policies. Our research can also provide implications for investment strategies given the time-varying inflation hedging benefits in housing. Our research on housing is particularly worthy of attention for a broader audience, since housing constitutes an important component of household’s financial portfolio. Reference: Fogler, H. R. (1984). 20% in real estate: Can theory justify it? Journal of Portfolio Management, 10, 6–13.


The student will undertake a wide range of research tasks. The student will have semi-weekly meetings with the principal and secondary supervisors who will co-ordinate the student’s progress, including through an ongoing learning needs assessment. The output will be a report with exploratory research that will be the basis for a future publication. The tasks of the research and the relevant timeline have been broken down into the following stages: 1. Literature review (June 2020) • The principal supervisor will guide the student to conduct a systematic literature review; • The student will assist the supervisors in writing up the findings of this literature review. 2. Data management (July 2020) • The principal supervisor will instruct the student to collect and process relevant data in Excel; • The student will manage and arrange the dataset so it is suitable for analysis. 3. Data analysis (August 2020) • The second supervisor will instruct and guide the student in the use of relevant statistical software; • The student will use the dataset created in stage 2 of the research to conduct empirical analysis. 4. Writing up the results (September 2020) • The second supervisor will guide the student to interpret the empirical results; • The student will assist the supervisors in writing a report and present the findings in an appropriate and concise manner.

Skills, knowledge and experience required

No prior knowledge is required for the UROP placement, but willingness to learn and to work collaboratively is essential. The principal and secondary supervisors will guide the student to produce quantitative results and to develop financial modelling skills from start to finish.

Skills which will be developed during the placement

The principal and secondary supervisors will work closely with the student to develop the skills needed for completion of the project. This may enable the student to become a researcher in the future. The student will receive hands-on experience in most stages of the research process, and will develop skills as follows: 1. Writing skills • Ability to collate literature for academic work; • Critical interpretation and analysis of literature; • Writing up of key findings of literature review; • Report writing skills. 2. Data management • Practical data collection skills; • Organisational data management skills; • Training in the use of quantitative software packages (e.g. EViews or Stata); • Technical experience with the use of quantitative software packages; • Financial modelling skills; • Critically analyse and interpret results of analysis. 3. General skills • Ability to communicate successfully with research team; • Time management skills; • Research ethics.

Place of Work

Based in Henley Business School Library or computer labs at Henley Business School

Hours of Work

Flexible (an equivalent of 6 weeks full-time).

Approximate Start and End Dates (not fixed)

Monday 15 June 2020 - Wednesday 30 September 2020

How to Apply

The post will be advertised centrally on the UROP website between 24th February and 3rd April 2020. Students should submit their CV with details of two referees and Cover Letter directly to the principal supervisor, Dr. Pin-Te Lin (E-mail: Successful candidates will then be invited to interview.

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