Capitalisation of Fiscal Variables and Land Scarcity

David Stadelmann and Steve Billon

Urban Studies, 2012, vol. 49, issue 7, 1571-1594

Abstract: Fiscal packages usually capitalise into house prices. Yet if enough land for construction is available, housing developers could supply new houses and capitalisation may disappear. This paper provides a theoretical model in which income taxes and public services capitalise at lower rates when housing supply elasticity increases. Using an empirical linear interaction model, we estimate the impact of available land for construction on capitalisation rates with a panel of Swiss communities. Results indicate that fiscal variables do not capitalise differently in communities where housing supply is constrained by land availability. Thus, land availability is a necessary but not sufficient condition for capitalisation to disappear.

Date: 2012
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Related works:
Working Paper: Capitalization of Fiscal Variables and Land Scarcity (2010)
Working Paper: Capitalization of fiscal variables and land scarcity (2010)
Working Paper: Capitalization of fiscal variables and land scarcity (2010)
Working Paper: Capitalization of fiscal variables and land scarcity (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:sae:urbstu:v:49:y:2012:i:7:p:1571-1594

DOI: 10.1177/0042098011415433

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