Home Away From Home? Safe Haven Effects and London House Prices

Tarun Ramadorai and Cristian Badarinza

No 9786, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Historical time-series data is short relative to the frequency of political and economic crises. This makes it difficult to use pure time-series methods to identify the impacts of safe haven demand on asset prices, in the face of confounding effects from a wide range of alternative drivers. We present a new method to identify safe-haven effects which relies on combining the cross-section of asset prices with time-series measures of economic and political risk. We employ this strategy on large databases of historical housing transactions in London, and show that economic and political risk in Southern Europe, China, the Middle East, Russia, and South Asia is an important factor in explaining the dynamics of London house prices over the past two decades.

Keywords: Economic risk; Hedonic pricing; House prices; London; Political risk; Safe-haven (search for similar items in EconPapers)
JEL-codes: C53 D80 E47 F21 G12 G15 (search for similar items in EconPapers)
Date: 2013-12
New Economics Papers: this item is included in nep-cis, nep-mac and nep-ure
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Citations: View citations in EconPapers (2)

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