Consumer Spending and Fiscal Consolidation: Evidence from a Housing Tax Experiment

Paolo Surico and Riccardo Trezzi ()

No 2015-57, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: A major change of the property tax system in 2011 generated significant variation in the amount of housing taxes paid by Italian households. Using new questions added to the Survey on Household Income and Wealth (SHIW), we exploit this variation to provide an unprecedented analysis of the effects of property taxes on consumer spending. A tax on the main dwelling leads to large expenditure cuts among households with mortgage debt and low liquid wealth but generates only small revenues for the government. In contrast, higher tax rates on other residential properties reduce private savings and yield large tax revenues.

Keywords: Fiscal consolidation; marginal propensity to spend; mortgage debt; residential property taxes (search for similar items in EconPapers)
JEL-codes: E21 E62 H31 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2015-07-27
New Economics Papers: this item is included in nep-mac, nep-pbe, nep-pub and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (7)

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http://www.federalreserve.gov/econresdata/feds/2015/files/2015057r.pdf Full text (application/pdf)
http://dx.doi.org/10.17016/FEDS.2015.057r1 DOI (application/pdf)
https://www.federalreserve.gov/econresdata/feds/2015/files/2015057pap.pdf Full text (Original) (application/pdf)

Related works:
Working Paper: Consumer Spending and Fiscal Consolidation: Evidence from a Housing Tax Experiment (2016)
Working Paper: Consumer spending and fiscal consolidation: evidence from a housing tax experiment (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2015-57

DOI: 10.17016/FEDS.2015.057r1

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