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Using a unique dataset of appraised values and transaction prices, this paper investigates whether systematic over-appraisals could have been at the heart of the 2005/2006 German open-end fund crisis. Because sold properties are valued more closely to market values than unsold properties, we develop a hedonic pricing model that controls for sample selectivity. The resulting estimates of prices achievable in the market are then compared to appraised values. Our results show that the properties held by open-end real estate funds were likely to have been overvalued prior to the crisis. This supports the view that a fundamentally justified run was at the heart of the 2005/2006 crisis, and it challenges the effectiveness of current valuation practices.

Some current account rebalancing within EMU is currently in progress. Following the financial crisis, German current account surpluses with Italy, Spain, Portugal and Greece have decreased. The following article shows that rebalancing has been achieved mainly at the expense of domestic demand in these countries. Moreover, although all four peripheral countries have achieved some rebalancing of their current accounts vis-à-vis Germany, the path of adjustment differs.