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Renewed Momentum in the German Housing Market: Boom or Bubble?

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  • Xi Chen
  • Michael Funke

Abstract

The renewed momentum in the German housing market has led to concerns that Germany is vulnerable to asset price shocks. In this paper, we apply recently developed recursive unit root tests to detect the beginning and the end of potential speculative bubbles in Germany over the sample period 1987Q3 – 2012Q4. Overall, we find that actual house prices are not significantly disconnected from underlying economic fundamentals. Thus, there is no evidence of speculative house price bubbles in Germany.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2013/wp-cesifo-2013-06/cesifo1_wp4287.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4287.

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Date of creation: 2013
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Handle: RePEc:ces:ceswps:_4287

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Keywords: Germany; house price bubbles; right-tailed unit root tests;

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