On the Long-Term Effect of Recent Housing Policies in Korea

Byoung Hoon Seok and Hye Mi You
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Byoung Hoon Seok: Ewha Womans University

Korean Economic Review, 2021, vol. 37, 199-223

Abstract: This paper explores the long-term effect of recent housing policies in Korea. Using a twosector general equilibrium model with heterogeneous agents, we conduct three policy experiments: i) a reduction in the loan-to-value (LTV) ratio; ii) an increase in the house acquisition tax rate; iii) an increase in the property tax rate. We find that all three policies increase the relative price of housing structures in the long run, yet their quantitative effect is small, and that the reduced LTV ratio is effective in reducing the household debt. Heterogeneous responses to these policies depending on household wealth are crucial in these results.

Keywords: Housing Policies; House Prices; Household Debt; Heterogeneous Agents (search for similar items in EconPapers)
JEL-codes: E65 H31 R21 R31 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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