Economics at your fingertips  

The housing ladder, taxation, and borrowing constraints

Job Swank, Jan Kakes () and Alexander Tieman

MEB Series (discontinued) from Netherlands Central Bank, Monetary and Economic Policy Department

Abstract: Using a multi-tier model of the housing market, we show that both starters and movers benefit from mortgage interest deduction for higher income groups. However, such tax favouring also tends to facilitate house price explosions, especially when interest rates and downpayment ratios are low. More in general, the efficiency of implicit tax subsidies to homeowners depends critically on the price responsiveness of new construction, which is found to differ strongly from country to country. Irrespective of supply conditions, running down mortgage interest deduction is likely to detract from the profits of lending institutions.

Keywords: House prices; Housing market; Mortgage lending; Taxation (search for similar items in EconPapers)
JEL-codes: G12 G21 H20 R31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo, nep-mfd, nep-pbe and nep-ure
Date: 2002-06
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (9) Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
Working Paper: The Housing Ladder, Taxation, and Borrowing constraints (2002) Downloads
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:

Access Statistics for this paper

More papers in MEB Series (discontinued) from Netherlands Central Bank, Monetary and Economic Policy Department Contact information at EDIRC.
Bibliographic data for series maintained by Rob Vet ().

Page updated 2018-12-07
Handle: RePEc:dnb:mebser:2002-9