Capitalization of Fiscal Variables and Land Scarcity

David Stadelmann and Steve Billon

CREMA Working Paper Series from Center for Research in Economics, Management and the Arts (CREMA)

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

Keywords: Capitalization; Land Scarcity; Taxes; Local public goods (search for similar items in EconPapers)
JEL-codes: H40 R21 R31 (search for similar items in EconPapers)
Date: 2010-01
New Economics Papers: this item is included in nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Capitalisation of Fiscal Variables and Land Scarcity (2012)
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:cra:wpaper:2010-03

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