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Spillover effects of company news across real estate markets and causal impact analysis

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  • Kirchhain, Heiko
  • Mutl, Jan
  • Zietz, Joachim

Abstract

We illustrate for two U.S. real estate markets how spillover effects may contaminate a causal impact analysis that relies on a research design with a control unit. Our two markets (Chattanooga, TN and Spartanburg, SC) are linked via dominant local employers (VW and BMW) that compete with each other in the automotive sector. The spillovers originate with an unanticipated negative news event for VW (2015 emissions scandal), which made the company’s very survival uncertain for a limited time period. The troubling news for VW translated into favorable news for BMW’s competitive position. In VW’s location, the demand for homes and prices declined temporarily; in BMW’s location the reverse occurred. A standard impact analysis of the VW scandal on the local housing market in Chattanooga using BMW’s Spartanburg location as a control would have overestimated its impact as a result of the spillover effects.

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  • Kirchhain, Heiko & Mutl, Jan & Zietz, Joachim, 2021. "Spillover effects of company news across real estate markets and causal impact analysis," Journal of Housing Economics, Elsevier, vol. 54(C).
    • Handle: RePEc:eee:jhouse:v:54:y:2021:i:c:s1051137721000358
    DOI: 10.1016/j.jhe.2021.101785
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    References listed on IDEAS

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    1. Rüdiger Bachmann & Gabriel Ehrlich & Ying Fan & Dimitrije Ruzic & Benjamin Leard, 2023. "Firms and Collective Reputation: a Study of the Volkswagen Emissions Scandal," Journal of the European Economic Association, European Economic Association, vol. 21(2), pages 484-525.
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    1. Doan, Quang Cuong, 2023. "Determining the optimal land valuation model: A case study of Hanoi, Vietnam," Land Use Policy, Elsevier, vol. 127(C).

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    More about this item

    Keywords

    Single family homes; Spillover effects; Causal analysis; SUTVA; VW emissions scandal;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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