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Costs of housing crises: International evidence

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  • Aßmann, Christian
  • Boysen-Hogrefe, Jens
  • Jannsen, Nils

Abstract

This analysis provides evidence for the costs housing crises induce in terms of GDP growth and under what circumstances these crises are particularly costly. Housing crises are often followed by recessions that are longer and deeper than other recessions. According to empirical estimates, a housing crisis reduces the GDP growth rate in the following year on average by 2.5 percentage points and has a further negative impact in the second year. One important channel transmitting the additional effect of housing crises works through the depression of the construction sector, while wealth effects play a minor role.

Suggested Citation

  • Aßmann, Christian & Boysen-Hogrefe, Jens & Jannsen, Nils, 2009. "Costs of housing crises: International evidence," Kiel Working Papers 1524, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1524
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    Cited by:

    1. R. Barrell & D. Karim & C. Macchiarelli, 2020. "Towards an understanding of credit cycles: do all credit booms cause crises?," The European Journal of Finance, Taylor & Francis Journals, vol. 26(10), pages 978-993, July.
    2. Boysen-Hogrefe, Jens, 2011. "Sinkende Immobilienpreise in China: Gefahr für die Weltkonjunktur?," Kiel Insight 2011.22, Kiel Institute for the World Economy (IfW Kiel).
    3. Boysen-Hogrefe, Jens & Jannsen, Nils & Meier, Carsten-Patrick, 2016. "A Note On Banking And Housing Crises And The Strength Of Recoveries," Macroeconomic Dynamics, Cambridge University Press, vol. 20(7), pages 1924-1933, October.
    4. Stelios Bekiros & Amanda Dahlström & Gazi Salah Uddin & Oskar Ege & Ranadeva Jayasekera, 2020. "A tale of two shocks: The dynamics of international real estate markets," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 25(1), pages 3-27, January.

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    More about this item

    Keywords

    Housing crisis; Panel Data;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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