We exploit staggered real estate transaction tax (RETT) hikes across German states to identify the effect of house price changes on mortgage credit supply. Based on approximately 33 million real estate online listings, we construct a quarterly hedonic house price index (HPI) between 2008:q1 and 2017:q4, which we instrument with state-specific RETT changes to isolate the effect on mortgage credit supply by all local German banks. First, a RETT hike by one percentage point reduces HPI by 1.2%. This effect is driven by listings in rural regions. Second, a 1% contraction of HPI induced by an increase in the RETT leads to a 1.4% decline in mortgage lending. This transmission of fiscal policy to mortgage credit supply is effective across almost the entire bank capitalization distribution.

In turbulenten Zeiten, die von anhaltenden geopolitischen Krisen, dem holprigen Regierungswechsel in Deutschland und volatilen Aktienmärkten geprägt sind, mögen die eine oder der andere Investor auf Betongold setzen. Ob dies eine gute Idee ist, zeigt ein Blick auf die Dynamik im europäischen Häusermarkt.

We study whether and how EU banks comply with tighter macroprudential policy (MPP). Observing contractual details for more than one million securitized loans, we document an elusive risk-shifting response by EU banks in reaction to tighter loan-to-value (LTV) restrictions between 2009 and 2022. Our staggered difference-in-differences reveals that banks respond to these MPP measures at the portfolio level by issuing new loans after LTV shocks that are smaller, have shorter maturities, and show a higher collateral valuation while holding constant interest rates. Instead of contracting aggregate lending as intended by tighter MPP, banks increase the number and total volume of newly issued loans. Importantly, new loans finance especially properties in less liquid markets identified by a new European Real Estate Index (EREI), which we interpret as a novel, elusive form of risk-shifting.

This Technical Report documents the construction and coverage of the IWH European Real Estate Index (EREI). Since 2018, we have used machine-learning methods to collect monthly listings of residential real estate available for sale or rent in up to 20 European countries. The Technical Report documents the cleaning and selection process and describes the data regarding coverage, moments, and frequencies to construct the EREI.

Climate change and inequality are critical and interrelated defining issues for this century. Despite growing empirical evidence on the economic incidence of climate policies and impacts, mainstream model-based assessments are often silent on the interplay between climate change and economic inequality. For example, all the major model comparisons reviewed in IPCC neglect within-country inequalities. Here we fill this gap by presenting a model ensemble of eight large-scale Integrated Assessment Models belonging to different model paradigms and featuring economic heterogeneity. We study the distributional implications of Paris-aligned climate target of 1.5 degree and include different carbon revenue redistribution schemes. Moreover, we account for the economic inequalities resulting from residual and avoided climate impacts. We find that price-based climate policies without compensatory measures increase economic inequality in most countries and across models. However, revenue redistribution through equal per-capita transfers can offset this effect, leading to on average decrease in the Gini index by almost two points. When climate benefits are included, inequality is further reduced, but only in the long term. Around mid-century, the combination of dried-up carbon revenues and yet limited climate benefits leads to higher inequality under the Paris target than in the Reference scenario, indicating the need for further policy measures in the medium term.