Foreign Residents and the Future of Global Cities

Guerreiro, João, Rebelo, Sérgio and Pedro Teles

No 18287, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Global cities are attracting an increasing number of tourists and foreign res- idents. This surge generates capital gains for property owners but negatively impacts renters and creates potentially important production, congestion, and amenities externalities. We study the optimal policy toward local and foreign residents in a model with key features emphasized in policy debates. Using this model, we provide sufficient statistics to calculate the optimal tax/transfer policies. These policies involve implementing transfers to internalize agglomer- ation, congestion, and other potential externalities. Importantly, it is not optimal to restrict, tax, or subsidize home purchases by foreign residents.

JEL-codes: H00 J61 R3 R58 (search for similar items in EconPapers)
Date: 2023-07
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Working Paper: Foreign Residents and the Future of Global Cities (2023)
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