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Costs of Housing Crises: International Evidence

  • Christian Aßmann
  • Jens Hogrefe
  • Nils Jannsen

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.

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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1524.

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Length: 24 pages
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:kie:kieliw:1524
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  1. Karl E. Case & John M. Quigley & Robert J. Shiller, 2001. "Comparing Wealth Effects: The Stock Market versus the Housing Market," Cowles Foundation Discussion Papers 1335, Cowles Foundation for Research in Economics, Yale University.
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  9. Aßmann, Christian, 2011. "Assessing the effect of current account and currency crises on economic growth," BERG Working Paper Series 80, Bamberg University, Bamberg Economic Research Group.
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  17. Fabian Valencia & Luc Laeven, 2008. "Systemic Banking Crises: A New Database," IMF Working Papers 08/224, International Monetary Fund.
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