https://macropaperwarehouse.com/authors/bjorn-tyrefors/Björn TyreforsHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/the-housing-wealth-effect-quasi-experimental-evidence/https://macropaperwarehouse.com/papers/the-housing-wealth-effect-quasi-experimental-evidence/<p>This paper estimates a causal housing wealth effect on consumption using a quasi-natural experiment in Stockholm, Sweden. The identification exploits an unanticipated political decision — announced in September 2007 — to renew the operating contract of Bromma Airport through 2038, reversing a long-standing expectation of closure by 2011. Because the decision resulted from opaque political bargaining and was widely characterized as a political coup by opposition parties, the announcement was genuinely unexpected. The negative externality of continued airport operations (primarily aircraft noise exceeding 70 decibels within a mapped contour) capitalized locally into house prices within one quarter of the announcement. Using difference-in-differences on all single-family house transactions in Stockholm Municipality from 2004 to 2012, the authors estimate a house price decline of 19.4 percent for dwellings within 1,000 meters of the noise contour relative to those farther away (t-statistics above 5; robust to control variables and sample period). Co-op apartment prices show no statistically significant response, consistent with greater structural noise insulation in multi-story concrete buildings.</p>