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Macroeconomic Effects of the German Government’s Building Rehabilitation Program

Author

Listed:
  • Kronenberg, Tobias
  • Kuckshinrichs, Wilhelm
  • Hansen, Patrick

Abstract

The German government maintains programs providing financial support for the rehabilitation of buildings with the aim of reducing energy consumption and greenhouse gas emissions in the building sector. Lately, these programs have received additional attention for three reasons: First, the government’s new Energy Concept from 2010 incorporates a substantial expansion of building rehabilitation activities. Second, the programs have been used as a tool for macroeconomic stabilization in the wake of the 2008/2009 financial crisis. Third, the government is concerned about the public deficit and all kinds of public expenditure are coming under increasing scrutiny. The aim of our paper is to contribute to a fact-based discussion of the costs and benefits of the building rehabilitation program. We develop an extended input-output model (STEIN) to estimate the macroeconomic effects of the rehabilitation measures that received funding and how they affect the public deficit, focusing on the revenue from income taxes and social security contributions (SSC) as well as taxes on products and production. Our findings indicate that the programs induce substantial public revenue mainly through income taxes and SSC which have to be weighed against the program cost. We also estimate the distribution of public cost and public revenue between different levels of government (national level, federal state level and municipality level). If the rehabilitation measures do not crowd out other investment projects, the net effect on the public deficit turns out to be positive.

Suggested Citation

  • Kronenberg, Tobias & Kuckshinrichs, Wilhelm & Hansen, Patrick, 2012. "Macroeconomic Effects of the German Government’s Building Rehabilitation Program," MPRA Paper 38815, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:38815
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    File URL: https://mpra.ub.uni-muenchen.de/38815/1/MPRA_paper_38815.pdf
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    References listed on IDEAS

    as
    1. Wilhelm Kuckshinrichs & Tobias Kronenberg & Patrick Hansen, 2010. "Das CO 2 -Gebäudesanierungsprogramm der KfW: Klimaschutz, Konjunktur- und Budgeteffekt," Wirtschaftsdienst, Springer;German National Library of Economics, vol. 90(9), pages 616-623, September.
    2. Miller,Ronald E. & Blair,Peter D., 2009. "Input-Output Analysis," Cambridge Books, Cambridge University Press, number 9780521517133, July - De.
    3. Miller,Ronald E. & Blair,Peter D., 2009. "Input-Output Analysis," Cambridge Books, Cambridge University Press, number 9780521739023, July - De.
    4. Kuckshinrichs, Wilhelm & Kronenberg, Tobias & Hansen, Patrick, 2010. "The social return on investment in the energy efficiency of buildings in Germany," Energy Policy, Elsevier, vol. 38(8), pages 4317-4329, August.
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    Cited by:

    1. Rammer, Christian & Gottschalk, Sandra & Peneder, Michael & Wörter, Martin & Stucki, Tobias & Arvanitis, Spyros, 2017. "Does energy policy hurt international competitiveness of firms? A comparative study for Germany, Switzerland and Austria," Energy Policy, Elsevier, vol. 109(C), pages 154-180.
    2. Spyros Arvanitis & Michael Peneder & Christian Rammer & Tobias Stucki & Martin Wörter, 2016. "The adoption of green energy technologies: The role of policies in an international comparison," KOF Working papers 16-411, KOF Swiss Economic Institute, ETH Zurich.
    3. Spyros Arvanitis & Michael Peneder & Christian Rammer & Tobias Stucki & Martin Wörter, 2016. "How Different Policy Instruments Affect the Creation of Green Energy Innovation: A Differentiated Perspective," KOF Working papers 16-417, KOF Swiss Economic Institute, ETH Zurich.

    More about this item

    Keywords

    Energy efficiency; CO2 emissions; building rehabilitation; economic stimulus;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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