IDEAS home Printed from https://ideas.repec.org/p/mag/wpaper/08007.html
   My bibliography  Save this paper

Who has really paid for the Reconstruction of East Germany? Expected and Realized Returns on Real Estate Investments in East and West Germany in the 1990s

Author

Listed:
  • Tina Bensemann

    () (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)

  • Dirk Kiesewetter

    () (Julius-Maximilians-University Würzburg)

Abstract

This paper explores cultural differences in risky choices between Australian and German students. The purpose of this paper is to challenge the wide-spread view that investment in residential property in East Germany after unification has turned out to be a financial disaster in most cases by calculating (1) the after-tax return an investor in real property might have expected at the beginning of the 1990s and (2) the after-tax return that has been realized ten years after. We compare investments by a high-income investor resident in Germany in an average individually-owned flat in three major cities in East Germany and two cities in West Germany. The result of our study is that tax subsidies have protected investors from loosing money in a real estate investment. Therefore, it was indeed the taxpayers not the investors who have borne the cost of reconstructing East Germany. But taxpayers have spent a lot more on subsidising the much bigger West German housing market where property prices and tax subsidies per average investment were much higher.

Suggested Citation

  • Tina Bensemann & Dirk Kiesewetter, 2008. "Who has really paid for the Reconstruction of East Germany? Expected and Realized Returns on Real Estate Investments in East and West Germany in the 1990s," FEMM Working Papers 08007, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  • Handle: RePEc:mag:wpaper:08007
    as

    Download full text from publisher

    File URL: http://www.ww.uni-magdeburg.de/fwwdeka/femm/a2008_Dateien/2008_07.pdf
    File Function: First version, 2008
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. European Commission, 2010. "Tax Policy after the Crisis: Monitoring Tax Revenues and Tax Reforms in EU Member States 2010 Report," Taxation Papers 24, Directorate General Taxation and Customs Union, European Commission.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mag:wpaper:08007. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guido Henkel). General contact details of provider: http://edirc.repec.org/data/fwmagde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.