The Capitalization of Interest Subsidies: Evidence from Sweden

Berger, Tommy, et al

Journal of Money, Credit and Banking, 2000, vol. 32, issue 2, 199-217

Abstract: We analyze by far the most extensive data base yet employed in estimating capitalization of below-market interest rates into asset prices: nearly 300,000 sales of owner-occupied homes in Sweden from 1981 to 1993 with 27,000 including government subsidized interest rates. Our estimates indicate very clearly that interest subsidies are capitalized into house prices. The below-market financing parameter is consistently significant in all model specifications, irrespective of assumptions about the degree of foresight, representation of the age structure and interest rate measure for all ten regions that we have studied. In our favored model specification the estimated capitalization coefficients center on unity, indicating full capitalization.

Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (12)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:32:y:2000:i:2:p:199-217

Access Statistics for this article

Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

More articles in Journal of Money, Credit and Banking from Blackwell Publishing
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and Christopher F. Baum ().