Local governments' indebtedness and its impact on real estate prices

Martin Micheli

No 605, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

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.

Keywords: real estate prices; local government debt (search for similar items in EconPapers)
JEL-codes: R30 R51 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-eur, nep-geo and nep-ure
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:605

DOI: 10.4419/86788702

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