Land price diffusion across borders – The case of Germany

Aaron Grau, Martin Odening and Matthias Ritter

No 288296, 165th Seminar, April 4-5, 2019, Berlin, Germany from European Association of Agricultural Economists

Abstract: Land market regulations are often justified by the assumption that activities of foreign and non-agricultural investors drive up prices in domestic land markets. However, empirical knowledge about the dynamics of agricultural land prices across borders is sparse. Using the German reunification as a natural experiment, we study the effect of the former inner German border on the dynamics of agricultural land prices in East and West Germany. We apply a land price diffusion model with an error correction specification to analyze spatial agricultural land markets. A novel feature of our model is its ability to distinguish price diffusion within states and across state borders. We provide evidence for a persistent border effect given that the fraction of spatially integrated counties is larger within states than across the former border. Moreover, we observe non-significant error correction terms for many counties along the former border. From a policy perspective, it is striking to realize that even 25 years after German reunification, pronounced land price differences persist. It is quite likely that price diffusion through existing borders within the EU would take even more time given language barriers, different institutional frameworks, and information asymmetries between domestic and foreign market participants.

Keywords: Land; Economics/Use (search for similar items in EconPapers)
Pages: 30
Date: 2019-02-27
New Economics Papers: this item is included in nep-agr
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://ageconsearch.umn.edu/record/288296/files/Grau-148.pdf (application/pdf)

Related works:
Journal Article: Land price diffusion across borders – the case of Germany (2020)
Working Paper: Land price diffusion across borders: The case of Germany (2018)
Working Paper: Land price diffusion across borders: The case of Germany (2018)
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:ags:eaa165:288296

DOI: 10.22004/ag.econ.288296

Access Statistics for this paper

More papers in 165th Seminar, April 4-5, 2019, Berlin, Germany from European Association of Agricultural Economists Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().