Urban Renewal in Saxony: A Need for a more Problem-orientated Allocation of Subsidies!
Claus Michelsen
Wirtschaft im Wandel,
No. 2,
2008
Abstract
Currently, the political discussion of urban renewal in East Germany focuses more and more on new strategies to solve the problems of urban decline and vacancies on the housing market. Since 2001, the demolition of housing has been subsidized with approximately one billion Euros. Critics of this strategy argue that the continuation of demolition leads to a fragmentation of cities and a loss of urban functions. Therefore, they suggest to focus more on revitalization of residential quarters and to allocate more subsidies to improve neighbourhoods as well as residential amenities to lower housing vacancies.
This article argues that on the one hand, the overall housing vacancy-rates cannot be lowered with the current instruments of urban revitalization. Even though, there is a chance to attract citizens from the periphery of cities. This means to redistribute housing vacancies instead of an overall reduction. On the other hand, this strategy needs to be clearly focused on selected cities in which a potential of immigration exists. However, empirical results from Saxony suggest a different picture: The allocation of subsidies for urban revitalization shows no identifiable pattern. Therefore, the author proposes to refocus the policy of urban redevelopment.
Read article
New Limits of Municipal Economic Activity: Expansion versus Reduction?
Peter Haug
Wirtschaft im Wandel,
No. 12,
2007
Abstract
On October 11th and 12th 2007, the department of urban economics of the Halle Institute for Economic Research organized a conference on local governments’ entrepreneurial activities. The main target of this second conference after the first one in 2005 was to analyze the spatial and functional boundaries of municipal economic activities. The participants came from various fields of science, local public administrations, municipal enterprises, associations and included politicians and others interested in the topic. The presentations covered a broad variety of subjects. On the first conference day, the speakers dealt with the partly controversial attitude of different disciplines such as law, economics, public business administration or sociology towards the local public economy. Other presenters focused on selected municipal services (public transportation, housing).
The second day was dedicated to the topics restrictions on municipal economic activities in Southern Europe, regional effects of municipal enterprises and employee protection in case of privatization. The conference was closed by a panel discussion with distinguished representatives from politics, science and management about the future role of municipal enterprises.
The presentations and discussions showed that the times are changing for the local public sector. In addition, the participants rejected an unrestricted extension of markets or business fields of municipal enterprises as well as the complete privatization of municipal services.
Read article
The German Upswing Takes a Break
Wirtschaft im Wandel,
2. Sonderausgabe
2007
Abstract
The world economy continues to expand healthily, but risks have increased during summer. The crisis of the housing sector in the US has deepened: A revaluation of mortgage backed assets has triggered turbulences on global financial markets. The institutes expect that financial markets will calm down during the coming months, but that the downswing in the US will slow the pace of the world economy. The economy in the euro area will, in addition, be dampened by the appreciation of the euro. The German economy is, in spite of a restrictive fiscal policy, in a robust upswing. Because wage setting and inflation continues to be moderate, there will be no need for a restrictive monetary policy. Thus the German economy will, due to slower demand from the US and higher costs of financing, lose momentum, but chances are good that the upswing will only take a break. In the coming year private consumption is expected to be the main contributor to growth, because wage incomes will expand strongly. Unemployment will continue to shrink, albeit at a smaller rate than during 2007. Fiscal policy will no longer be restrictive. Economic policy has improved the conditions for growth in Germany; there is, however, still much to do. Public finances have to be consolidated further, but at the same time, public investment has to be strengthened. This can be achieved if public consumptive expenditure growth is limited. The institutes suggest to increase public expenditure by 2% per annum over the cycle in nominal terms; this is, by less than by the trend growth rate of nominal GDP.
The institutes advise against a reversal of the recent labour market reforms. Instead, incentives for taking up jobs should be increased further.
Read article
Urban Consolidation in Saxony a Thread for the Historic Districts?
Dominik Weiß
Wirtschaft im Wandel,
No. 8,
2007
Abstract
Different lobby groups that fear a discrimination of the old and historic housing stock with its cultural value recently challenged the success of the urban renewal program „Stadtumbau Ost“. To make the discussion about it more objective, the subsidies for deconstruction and for improvement of the program are examined for the Free State of Saxony. The descriptive empirical analysis shows that the deconstruction of old houses mainly took place in cities with a higher share of old houses. Insofar, the danger of a total loss of the old housing stock may be low. Considering the allocation of the improvement subsidies, it can be shown that areas with old housing do profit relatively more, but not so often like the prefabricated socialist residential areas of the former GDR. The development of the historic housing stock, an explicit goal of the program “Stadtumbau Ost”, has been carried out in a minor degree in favour to the goal of housing market-adjustment.
Read article
US Immobilienmarkt – Gefahr für die Konjunktur?
Marian Berneburg
Wirtschaftsdienst,
No. 5,
2007
Abstract
The commentary at hand takes a look at the most recent development of the US housing market with special attention to the so-call subprime segment, which covers mortgages with below average credit ratings. The discussion comes to the conclusion that after several boom years the mortgage market in the US is currently living through a healthy correction, which should only in the worst of all cases have severe negative effects on the US economy.
Read article
Do House Prices Drive Aggregate Consumption?
Marian Berneburg, Axel Lindner
Wirtschaft im Wandel,
No. 10,
2006
Abstract
In recent times increasing house prices have been credited with a stong positive influence on aggre-gate consumption. But it is questionable in how far higher prices are at all able to lift the purchasing power of the economy as whole: The seller’s profit of a high price, equals the buyer’s loss. But while a positive correlation between house prices and consumption is evident, it is not a sign of irra-tional behaviour by market participants. In fact it seems that both factors are driven by other pa-rameters: the interest rate and expectations about future interest rates and economic activity. For a selection of four developed countries, the follow-ing article tries to give an explanation for the house price developments of the past 15 years. While disregarding country specific risk as well as institutional aspects and demographic factors, a present value caluclation forms the basis for esti-mating a fundamentally justified price movement. Expectations for future rents and discount rates are being proxied by a moving average of past values. It can be observed how interest rate changes and long-run economic growth, two as-pects that clearly also drive private consumption, play a key role here.
Read article
Supraregional sales markets: Development chances for companies in the East German manufacturing sector
Brigitte Loose, Udo Ludwig
Wirtschaft im Wandel,
No. 16,
2001
Abstract
In this paper the export activities of the East German manufacturing industry are studied where exports are defined in a broad sense including both sales abroad and in West Germany. Survey data for 1998 and 1999 are used to reveal the relationship between technical as well as institutional characteristics of the companies and their exports. The following questions are discussed: Which companies participate in the export activities? What are the main regions of their business? Which in-house factors influence the export activities? What are the financial outcomes for the companies engaged in exports? Hypotheses are built on the basis of the market transaction costs theory. Bivariate and multivariate approaches are applied. The data are taken from the “Establishment Panel” of the Institute for Employment Research at the Federal Employment Services (IAB) in Nuremberg (Germany).
Read article
Housing vacancies in East Germany: There is more than one way to look at it
Peter Franz
Wirtschaft im Wandel,
No. 11,
2001
Abstract
New up-to-date data about housing vacancies in East German cities allow a more differentiated interpretation of the disparities in the East German housing market. The data show that the cities in Saxony and in Saxony-Anhalt
are disproportionally affected by this problem. They also show that the modernizing and renovating activities of the housing associations and cooperatives themselves contribute to the rising vacancy rate.
Read article
Climate protection policy in the housing sector: Lacking impact and need for action
Steffen Hentrich
Wirtschaft im Wandel,
No. 11,
2001
Abstract
Energy savings in the rental housing sector may contribute to the reduction of global greenhouse gas emission. However, emissions have gone up since the early nineties despite of large energy saving potentials. In general the effects of energy saving regulations and support programmes were overestimated. Unfortunately, these programmes ignore market specific restraints.
Markets do not provide optimal incentives to prevent emissions since the costs of greenhouse gas emissions are not fully internalised in fuel prices. Special characteristics of rental housing market in Germany enhance this deficit. Consequently profitable measures of saving energy are neglected. Overall the effectiveness of regulations and support programmes suffers.
Therefore it is necessary to strengthen energy saving incentives. Suitable instruments would include a gradual rise in fuel taxes (Öko-Steuer), a reduction of rental housing market control and measures to improve the transparency of energy consumption.
Read article
Housing Vacancies in East German Cities: A Problem not only for Housing Policy
Peter Franz
Wirtschaft im Wandel,
No. 2,
2001
Abstract
In numerous East German cities extreme imbalances in the housing
market have developed with the consequence of extensive housing vacancies. Primarily inner city housing units constructed in the late 19th and early 20th century and housing units constructed within the period of the socialist regime are concerned. The causes for these imbalances can be found in decisions of socialist urban planning, in demographic
factors, in oversized federal promotion of new housing construction after the German unification, and in income increases of private households. The commission “Structural Change in the Housing Economy of the New Länder“, installed by the federal government, has examined this problem and submitted preliminary political recommendations on the federal level in order to reduce the housing market imbalances. The commission recommends federal subsidies for tearing off vacant housing units within a period of ten years. A measure like this raises the question how the risk can be handled that too many flats are torn down. In addition, the commission recommends to double the subsidies for households acquiring already existing flats for own use and to halve the subsidies for households investing in newly built owner-occupied housing in East Germany. These incentives to acquire existing housing units might prove too weak because of the strong preferences of East German households to live in single-family houses. Measures on the federal level can support but cannot replace necessary concrete planning and solution strategies in the vacancy-plagued cities “in situ“.
Read article