William Miles
Final draft: February 2019
Economic Systems, forthcoming.
For the European Central Bank to incorporate euro-wide housing into its policy decisions, it is helpful if home values across the currency union are convergent in the long run. We apply a probabilistic pair-wise approach to the question of whether home values converge across eight euro-zone housing markets. Contrary to previous studies, we find only marginal evidence that euro housing markets converge. Moreover, for what convergence there appears to be, there is no evidence that the adoption of the euro itself played a role in creating such convergence. Finally, Germany’s housing sector is rarely found convergent with those of other countries. This is worrying as Germany is the dominant economy of the currency union.
