Kiel Working Papers, Kiel Institute for World Economics
No 1524:
Costs of Housing Crises: International Evidence
Christian Aßmann, Jens Hogrefe and Nils Jannsen
Abstract: This analysis provides evidence for the costs housing
crises induce in terms of GDP growth and under what circumstances these
crises are particularly costly. Housing crises are often followed by
recessions that are longer and deeper than other recessions. According to
empirical estimates,a housing crisis reduces the GDP growth rate in the
following year on average by 2.5 percentage points and has a further
negative impact in the second year. One important channel transmitting the
additional effect of housing crises works through the depression of the
construction sector, while wealth effects play a minor role.
Keywords: Housing Crisis, Panel Data; (follow links to similar papers)
JEL-Codes: E21,; E32,; C23; (follow links to similar papers)
24 pages, June 2009
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