Land price diffusion across borders – the case of Germany

Abstract

Land market regulations are often justified by the assumption that activities of foreign and nonagricultural investors drive up prices in domestic land markets. However, empirical knowledge about the dynamics of agricultural land prices across borders is sparse. Using the German reunification as a natural experiment, we study the effect of the former inner German border on the dynamics of agricultural land prices in East and West Germany. We apply a land price diffusion model with an error correction specification to analyse spatial agricultural land markets. A novel feature of our model is its ability to distinguish price diffusion within states and across state borders. We provide evidence for a persistent border effect given that the fraction of spatially integrated counties is larger within states than across the former border. Moreover, we observe non-significant error correction terms for many counties along the former border. From a policy perspective, it is striking to realize that even 25 years after German reunification, pronounced land price differences persist. It is quite likely that price diffusion through existing borders within the EU would take even more time given language barriers, different institutional frameworks, and information asymmetries between domestic and foreign market participants.

Spatial effects are determinants of agricultural land prices in Brazil

“…In addition, spatial econometrics has recently been successfully combined with other econometric tools, resulting in models with a high degree of sophistication and complexity. Two main trends stand out in this process: (i) the incorporation of quantile methods that allow analysing the detailed contributions of different determinants via the conditional distribution of land prices (Kostov, 2009a;Lehn & Bahrs, 2018b;Sardaro et al, 2021), with the possibility of incorporating even machine learning elements into such models (Córdoba et al, 2021); and (ii) the combination of spatial econometrics with time series econometrics in studies that have focused on the evaluation of the spatiotemporal integration of land markets (Carmona & Rosés, 2012;Yang et al, 2017Yang et al, , 2019Grau et al, 2020).…”

Os efeitos espaciais são fatores determinantes dos preços das terras agrícolas no Brasil

“…Além disso, recentemente, a econometria espacial também vem sendo combinada com sucesso com outras ferramentas econométricas, resultando em modelos de alto grau de sofisticação e complexidade. Duas tendências principais se destacam nesse processo: (i) a incorporação de métodos quantílicos, que permitem analisar a contribuição detalhada de diferentes determinantes ao longo da distribuição condicional dos preços da terra (Kostov, 2009a;Lehn & Bahrs, 2018b;Sardaro et al, 2021), com a possibilidade de incorporar, até mesmo, elementos de aprendizagem de máquinas aos modelos (Córdoba et al, 2021); e (ii) a combinação da econometria espacial com a econometria de séries temporais, cujos trabalhos têm se focado na avaliação da integração espaço-temporal dos mercados de terra (Carmona & Rosés, 2012;Yang et al, 2017Yang et al, , 2019Grau et al, 2020).…”

Measuring liquidity in agricultural land markets

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