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Costs of Housing Crises: International Evidence

Author

Listed:
  • Christian Aßmann
  • Jens Hogrefe
  • 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.

Suggested Citation

  • Christian Aßmann & Jens Hogrefe & Nils Jannsen, 2009. "Costs of Housing Crises: International Evidence," Kiel Working Papers 1524, Kiel Institute for the World Economy.
  • Handle: RePEc:kie:kieliw:1524
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    File URL: https://www.ifw-members.ifw-kiel.de/publications/costs-of-housing-crises-international-evidecne/costs-of-housing-crisies-international-evidence-jan-2011.pdf
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    More about this item

    Keywords

    Housing Crisis; Panel Data;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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