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The Effect of Terrorism on Housing Rental Prices: Evidence from Jerusalem

Nadav Ben Itzhak ()
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Nadav Ben Itzhak: Bank of Israel

No 2018.08, Bank of Israel Working Papers from Bank of Israel

Abstract: This research investigates the effect of terrorism on housing rental prices. September 2015 was the beginning of a new large-scale terror wave in Israel, hitting Jerusalem more than any other major city. Considering this terror wave as an exogenous shock to the housing rental market in Jerusalem, this study analyzes its effect on rental prices compared to Tel-Aviv and within Jerusalem. Immediately after the beginning of the terror wave, rental prices in Jerusalem declined, compared to Tel-Aviv, reaching a 2%-3% decrease within a year. Within Jerusalem, the results indicate that proximity of an additional one kilometer to suspected origins of terror incidents, such as the Green Line and Damascus Gate, resulted in a 0.3%-0.4% decline in rental prices.

New Economics Papers: this item is included in nep-ara and nep-ure
Date: 2018-09
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