What happened to the East German housing market? A historical perspective on the role of public funding

Claus Michelsen and Dominik Weiß

Post-Communist Economies, 2010, vol. 22, issue 3, 387-409

Abstract: This article analyses the development of the East German housing market after reunification of the former German Democratic Republic and the Federal Republic of Germany in 1990. We analyse the dynamics of the East German housing market within the framework of the well known stock-flow model, proposed by DiPasquale and Wheaton. We show that the disequilibrium observable today is to a large extent caused by post-reunification housing policy and its strong fiscal incentives to invest in the housing stock. Moreover, in line with the stylised empirical facts we show that 'hidden reserves' of the housing market were reactivated since the economy of East Germany became market-organised. Since initial undersupply was overcome faster than politicians expected, the fiscal stimuli implemented were too strong. In contrast to the widespread opinion that outward migration caused the observable vacancies, this study shows that not weakness of demand but supply side policies caused the observable disequilibrium.

Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.tandfonline.com/doi/abs/10.1080/14631377.2010.498686 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:pocoec:v:22:y:2010:i:3:p:387-409

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/CPCE20

DOI: 10.1080/14631377.2010.498686

Access Statistics for this article

Post-Communist Economies is currently edited by Roger Clarke

More articles in Post-Communist Economies from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().