House Prices and Public Debt

Mads Gjedsted Nielsen, Aleksandra Rzeznik

Research output: Contribution to conferencePaperResearchpeer-review

Abstract

By using the 2002 case of fraud in the Danish municipality Farum by then mayor Peter Brixtofte as an exogenous shock to public debt of 1 billion DKK, I estimate the effect of public debt on house prices. I find that the average home ownership lost about 570,000 DKK or as much as 29% of the average house price in the municipality. Furthermore, I document that the aggregate house price loss of 2.1 billion DKK greatly exceeds the increase in public debt of 1 billion DKK. I find that the drop in house prices is sustained 1 year, indicating that the housing market initially overreacts but the overreactions is dampened over time.
Original languageEnglish
Publication date2014
Number of pages24
Publication statusPublished - 2014
EventEuropean Economic Association & Econometric Society 2014 Parallel Meetings - Toulouse, France
Duration: 25 Aug 201429 Aug 2014
http://www.eea-esem.com/EEA-ESEM/2014

Conference

ConferenceEuropean Economic Association & Econometric Society 2014 Parallel Meetings
CountryFrance
CityToulouse
Period25/08/201429/08/2014
Internet address

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