On the Effects of Owner-Occupied Subsidies on Housing Construction in Germany

Between 1997 and 2005, the German government provided owner-occupied subsidies to fund new private housing construction and stock purchases to increase owner-occupied housing. The purpose of this paper is to analyse the impact of these subsidies on total housing construction for the 1997-2007 period using regionalised data. This paper tests for differences between counties and cities and examines whether local participation in housing programs is related to regional migration and fertility. Based on the dynamic results, short- and long-run elasticities with respect to the subsidy program are calculated