The purpose of this investigation is to research the causal link between economicpolicy uncertainty (EPU) and the housing returns (HR) in Germany. In the estimatedvector autoregressive models, we test its stability and find the short-run relationshipbetween HR and EPU is unstable. As a result, a time-varying approach (bootstraprolling window causality test) is utilized to revisit the dynamic causal link, and we findEPU has no impact on HR due to the stability of the real estate market in Germany.HR does not have significant effects on EPU in most time periods. However, significantfeedback in several sub-periods (both positive and negative) are found from HR toEPU, which indicates the causal link from HR to EPU varies over time. The empiricalresults do not support the general equilibrium model of government policy choicesthat indicate EPU does not play a role in the real estate market. The basic conclusionis that the real estate market shows its stability due to the social welfare nature andthe rational institutional arrangement of the real estate in Germany, and the realestate market also shows its importance that it has significant effect on the economicpolicy choice in some periods when negative external shocks occur.
展开▼
