Tax Incentives and House Price Volatility in the Euro Area: Theory and Evidence

Paul Van den Noord

Economie Internationale, 2005, issue 101, 29-45

Abstract: A problem associated with inflation differentials in monetary unions is that the “crowding-in” effect of lower real interest rates associated with high inflation will initially outweigh the loss of competitiveness (crowding out). The crowding-in effect may produce volatility in house prices, especially if tax regimes favour the occurrence of bubbles. This paper shows that this is the case notably in the smaller countries of the euro area, and this could explain the persistence of inflation differentials in the area to some extent.

Keywords: Tax and budget policy; EMU (search for similar items in EconPapers)
JEL-codes: E52 E61 F42 H20 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (38)

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Working Paper: Tax Incentives and House Price Volatility in the Euro Area: Theory and Evidence (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepiei:2005-1qb

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