The downsizing of the Swedish military in 1990-2010 and its spillover effects : A natural experiment on Sweden’s housing market

In this thesis, I study the effect of the downsizing of military bases after theCold War on both local house prices and neighboring municipalities’ houseprices. To establish causality, I use a Difference-in-Difference approach withTwo-Way Fixed Effects. Then an Event Study is performed to examinepossible dynamic effects. I studied both the general effect and heterogeneitytreatment effect. I found that there, in general, is no effect on local houseprices. Only from the 1999s defense bill, which increased local house priceswhen air force bases closed and decreased when army bases closed. However,there is evidence of spillover effects on neighboring municipalities’ houseprices in general, regardless of the base type, from the downsizing of themilitary.