Recent Reforms in Spanish Housing Markets: An Evaluation using a DSGE Model

Juan Mora-Sanguinetti and Margarita Rubio

No 2013/03, Discussion Papers from University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM)

Abstract: After a long academic debate, Spain finally repealed in 2012 the deduction for home purchase. The abrogation took effect in 2013. In parallel, the VAT for the purchase of new housing was increased after a short period in which it had a reduced rate. The aim of this paper is to assess the macroeconomic effects of these two relevant housing market reforms. In order to do that, we use a dynamic stochastic general equilibrium (DSGE) model calibrated to capture the key ratios of the Spanish economy. The model includes a housing market, covering both the rental market side and the property market side and credit-constrained agents. We find that these measures drive down housing prices and have a negative impact on output and employment in the construction sector. However, in the long run, this last effect is offset by the benefits of a reduction in distortionary taxes.

Keywords: Housing Market Reforms; Rental Market; House Prices; Home Purchase Deduction; VAT on New Home Purchase (search for similar items in EconPapers)
Date: 2013-03
New Economics Papers: this item is included in nep-cmp, nep-dge and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.nottingham.ac.uk/cfcm/documents/papers/13-03.pdf (application/pdf)

Related works:
Journal Article: Recent reforms in Spanish housing markets: An evaluation using a DSGE model (2014)
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: https://EconPapers.repec.org/RePEc:not:notcfc:13/03

Access Statistics for this paper

More papers in Discussion Papers from University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM) School of Economics University of Nottingham University Park Nottingham NG7 2RD. Contact information at EDIRC.
Bibliographic data for series maintained by Hilary Hughes ().