Capital flows and real estate are pro-cyclical, and real estate has a substantial weight in economies' income and wealth. In this paper, we study the role of real estate markets in the transmission of bank flow shocks to output growth across German cities. The empirical analysis relies on a new...

We show in a dynamic stochastic general equilibrium framework that the introduction of a common currency by a group of countries with only partially integrated goods markets, incomplete financial markets and no labor migration across member states, significantly increases volatility of...

We analyze the positive and normative effects of a progressive tax on wages in a nonlinear New Keynesian DSGE model in the presence of demand and technology shocks. The non-linearity allows us to disentangle the effects of the progressive tax on the volatility and the level of macroeconomic...

This paper revisits the personal expenditure tax (PET), the most prominent version of a progressive consumption tax. The PET has a long intellectual tradition in economics, and the merits and demerits of this alternative to the personal income tax have been discussed at length. What has been...

This paper analyses the behaviour of prices and supply on the German housing market taking into account the interaction between prices and quantities. A novel price index for residential property prices covering the whole country going back to 1993 is used in a macroeconomic model to estimate...

Empirical evidence indicates local jurisdictions are internally more heterogeneous than standard sorting models predict. We develop a dynamic multi-region model, with fluctuating regional house prices, where an owner-occupying household's location choice depends on its current wealth and its...