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Local governments' indebtedness and its impact on real estate prices

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  • Micheli, Martin

Abstract

In this paper, we estimate the causal effect of public debt on real estate prices and rental prices. We identify shocks to investment credits of self-governed cities in Germany and control for potential benefits such as an increased supply of public goods, which might come in hand with increased indebtedness. Using spatial variation across self-governed cities allows us to estimate this effect. We find that shocks to public debt have a significant negative effect on apartment prices. Rental prices, on the other hand, do not seem to be affected by public debt. Tenants care more about the current and less about the future tax burden.

Suggested Citation

  • Micheli, Martin, 2016. "Local governments' indebtedness and its impact on real estate prices," Ruhr Economic Papers 605, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:605
    DOI: 10.4419/86788702
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    References listed on IDEAS

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    Cited by:

    1. Breidenbach Philipp & Eilers Lea, 2018. "RWI-GEO-GRID: Socio-economic data on grid level," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 238(6), pages 609-616, October.
    2. Agnieszka Kozera & Aldona Standar & Łukasz Satoła, 2020. "Managing Rural Areas in the Context of the Growing Debt of Polish Local Government Units," Agriculture, MDPI, vol. 10(9), pages 1-25, August.

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    More about this item

    Keywords

    real estate prices; local government debt;

    JEL classification:

    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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