Neelie Kroes' explanation on why she believes von Guttenberg to be a good advisor for Europe's "No Disconnect Strategy" strategy

Last week, I mailed Mrs. Kroes, inquiring about her peculiar choice of advisors. I wasn’t the only one taken by surprise, it seems. Please find her reply below:

Thank you for responding to the announcement of my invitation to Karl-Theodor zu Guttenberg to assist me in our “No Disconnect” Strategy. We have had many reactions and some very useful suggestions, but I am not able to respond to each one individually. But I take them seriously, I value the opportunity the Internet gives you to voice those concerns, and I believe they deserve a response.

First, what is most important to me is the No Disconnect Strategy itself. Because my focus is on people who are suffering, and people whom we can help.

My invitation to Karl-Theodor to help me take this work forward is my choice, and it’s about how we can help people who struggle without the most basic rights you can think of. In the past I’ve worked personally with him, and I know he is capable of coming up with and delivering excellent ideas. I also know that we need someone with his international outlook and contacts to help us push these issues forward: someone who understands the highly relevant security and foreign affairs world. This does not preclude other people and ideas from being involved; far from it, I want to build grass-roots coalitions and capacities.

Some of you have already suggested names of activists we should get in touch with: thank you for doing so, we will follow up. I congratulate those who are working in this field, especially those on the ground. There are individuals who are so brave and resourceful, and organisations doing great work. This invitation does not diminish their achievement in any way; nor should it inhibit their work. Part of Karl-Theodor’s role will be to reach out to those people, to ensure that their work gets the proper support and recognition. And so I hope those people are able to share their ideas and experiences.

Second, others have taken issue with actions or decisions Karl-Theodor has taken in the past. My invitation does not mean that I condone plagiarism. I leave him to answer questions about his PhD thesis. But I do know that all of us make mistakes we regret, and that the only way individuals and societies can move forward is through recognition, forgiveness and focussing on good things that can be done in the future. He has paid the price, resigning from all political offices and being stripped of his doctoral degree. So my invitation is about what Karl-Theodor can do for suffering people in the future, not what you or I think about his past.

Meanwhile, one does not need to agree with all his past statements about internet policies while he was German Minister for the Economy. While all serious people share the goal of tackling child pornography, I accept that there are different views about the right way to do so online. And this debate needs to be calm and rational precisely because it is a very emotive topic.

But I hope you would agree this is far, far from the situation that people continue to face in non-democratic countries. These are people whose access to communications networks has been inhibited, blocked or spied on merely to repress fundamental freedoms and silence political dissent. And it is this that will be the focus of his work.

Third, let me clarify the conditions of his position, as I stated on Monday. There is no payment, no staff, no special treatment. He will be providing advice and assistance to me in a personal capacity. We will keep costs to a minimum, and I can assure you I’ll squeeze him for every good idea and every piece of feedback he has.

So I’d like to put this issue in its perspective. Across the digital agenda spectrum, quite a few people already advise and assist me in different areas, on media freedom and pluralism, young entrepreneurship, cloud computing, media futures, and others. People from Germany and across the world; people from all different political parties and those of none. Because I believe in taking advice from a wide spectrum, and linking together the many different stakeholders from different areas of expertise – whether that expertise is in technology, Internet activism, foreign affairs, healthcare or whatever.

So, please see my invitation for what it is: adding one more person with talent to the good ideas and the momentum for internet freedom. Don’t let this one choice determine your overall view of this strategy, nor of the Digital Agenda, nor the European Commission. The world is more complex than that. Judge Karl-Theodor ultimately on the quality of the advice he provides. Judge me, and hold me accountable, for the decisions I take on the basis of that advice.

Kind regards,

Neelie Kroes

Moving to Boston, working for SEDO, researching at MIT

It’s been in the making for a while, but now everything is final: In January, I will move to Boston.

I will work on automatic domain appraisals and price design at (great data, great product, great company) and will be visiting at MIT’s Center for Real Estate. My research will be all about “virtual real estate” – needless to say that I am thrilled about this opportunity.

Guest Blog Post on Scientific American

On Rushes and Riches: The “Wild West” Era for Internet Domain Names Is Over as Efficient Markets for This “Virtual Land” Have Emerged

On April 22nd, 1889, large areas of what is now Oklahoma were officially opened up for homestead settlement. At high noon, thousands of pioneers raced from the territory’s borders into pristine land, claiming lots on a first come, first serve basis. Within hours (!), first cities emerged around railroad stations or at other well connected spots, quickly establishing local governments, basic infrastructure and property rights. Despite opposing laws, land claims were directly sold off in secondary markets.

Read my full blog post at the Scientific American website – klick here.

Proudly presenting IDNX, the first Internet Domain Name Index

Today, my newest project will launch: IDNX is the first high quality price index for internet domain names.

  • Each month, it calculates the latest trends in domain prices.
  • It is the appropriate benchmark for estimating changes in the value of your domains.
  • IDNX is based on data for more than 200,000 domain sales today, more to come in the future

For the full story, check out the project’s website or the brand new working paper.

Seminar at University of Amsterdam

On June 14, I was invited to give a presentation of my working paper on local price dynamics within cities at the University of Amsterdam’s Real Estate Group. The seminar was a great trigger to work on the paper again and to implement some new ideas beforehand (check the latest PDF). But even more, I am very grateful to the feedback provided by Peter Englund, Marc Francke and all other participants of the seminar. I greatly benefited from their discussions, comments and suggestions – UvA, Thank you so much!


On March 25th, I defended my dissertation titled Beyond Booms: Fundamentals and Mechanisms of Housing Markets in Decline.

I would like to thank Maastricht University, my family, my friends and colleagues for making this day a wonderful final chord for my years in Maastricht.

I am very grateful to prof. Franz Palm, prof. John Quigley, and prof. Peter Schotman for serving on my evaluation committee and for their invaluable feedback. The esteemed members of the corona, prof. Yongheng Deng, prof. Antoon Pelsser, prof. Dennis Bams, prof. Stefan Straetmans, prof. Jaap Bos, and dr. Sanstad, are thanked for their time, friendliness and, above all, for their challenging questions.

Gentrification and its discontents

Fears of gentrification are aired in the rapidly changing Berlin neighborhood

I have seen the “fuck yuppies”-tag on so many walls in Kreuzberg, Friedrichshain and even cozy Alt-Treptow.

Fear of gentrification in Berlin

This is a bit more elaborated statement on a board indicating the construction of new residential units on a piece of vacant land in Alt-Treptow. It says “Aufwertung = Verdrängung” which roughly  means “neighborhood improvements drive out current residents”.

Probably the best way to keep your rent down is to throw your garbage on the street in front of your house. Or put some graffiti at your neighbors freshly painted walls, as the tag below explains: “Wertminderung” means “depreciation / loss of value”.


Boring economist might suggest to increase the home ownership rate to overcome the conflict between incumbents and new residents.

PS: I was so proud of this post’s title – and now I have to realize that others have used it before. Bummer.

New working paper: The topography of growth and decline – Local price dynamics within cities

My latest working paper researches within-city home price dynamics in bullish and bearish residential real estate markets. It contributes to the literature addressing the urban layout of cities by formulating and empirically testing a novel idea for changes in the price gradients across neighborhoods under different market regimes. It finds that the combination of city-wide falling home prices and declining population numbers hurts low-value neighborhoods most, while falling home-prices in cities with robust demographics do not lead to shifts in the within-city distribution of housing wealth. In addition, the paper confirms earlier findings on endogenous home price dynamics.

A new level of spatial detailedness is achieved by combining a high-quality data-set for The Netherlands with estimation techniques borrowed from the geoscience domain. The data comprise of 1.8 million single family home transactions and 0.8 million apartments sold by members of the Dutch Realtor Association (NVM). This is the first paper that estimates home price index surfaces for an entire country based on a spatial error model (SER).

Price index for single-family homes in West Berlin

Next year, Berkeley’s Ashok Bardok, Bob Edelstein and Cynthia Kroll will publish an around-the-world analysis of the current housing crisis. Together with Piet Eichholtz, I had the honor to contribute a chapter on the big outlier in European housing markets: Germany. More on this soon.

In the meantime, I cannot refrain from publishing the first hedonic price index for single-family homes in West Berlin:

Home values take deep dive in West-Berlin
The blue line shows the prices for single-family homes in West Berlin, controlling for quality differences in the homes, while the red line represents home prices in real terms (without inflation). The dashed green line is the path of the Consumer Price Index (CPI).

Based on a data set of single-family homes we estimate a standard hedonic price equation spanning the years 1978 through 2007. The graph above suggests that the Berlin housing market has experienced roughly three phases for the 30 years covered by the index. The first period, between 1978 and 1989, can be characterized by steady growth. The average house price increase over this time period was 1.9 percent (corrected for inflation).

The exuberance in the aftermath of the fall of the Wall fueled price increases, peaking in 1994 with nominal prices being 47 percent above 1989 values. The average annual price increase for this period was 8.1 percent in nominal terms, and 4.6 percent in real terms.

In 1995, house prices decreased slightly followed by a much larger drop in 1996. In 2007, house prices were back at 1989 levels – in nominal terms. In real terms, however, prices had plummeted to 55 percent of their 1994 values, and 84 percent of their 1978 values. Such an extended period of price losses is unprecedented among European capitals (see figure below).

Berlin home prices compared to price dynamics in selected European capitals