Tax Incentives and House Price Volatility in the Euro Area: Theory and Evidence
AbstractA problem associated with inflation differentials in monetary unions is that the “crowding-in” effect of lower real interest rates associated with high inflation will initially outweigh the loss of competitiveness (crowding out). The crowding-in effect may produce volatility in house prices, especially if tax regimes favour the occurrence of bubbles. This paper shows that this is the case notably in the smaller countries of the euro area, and this could explain the persistence of inflation differentials in the area to some extent.
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Bibliographic InfoArticle provided by CEPII research center in its journal Economie Internationale.
Volume (Year): (2005)
Issue (Month): 101 ()
Tax and budget policy; EMU;
Other versions of this item:
- Paul van den Noord, 2003. "Tax Incentives and House Price Volatility in the Euro Area: Theory and Evidence," OECD Economics Department Working Papers 356, OECD Publishing.
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
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