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Macroeconomic policies and housing market in Taiwan

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  • Chu, Shiou-Yen

Abstract

This paper develops a dynamic stochastic general equilibrium (DSGE) model that analyzes the transmission mechanisms of a real estate transfer tax and other macroeconomic policies on Taiwan's housing market. Our model matches the volatility of Taiwan's housing prices and housing transactions during 2011–2015, when the loan-to-value ratio was reduced and a transfer tax along with a property tax were collected. The calibration results indicate that imposing a residential property tax or raising interest rates effectively curbs speculative housing transactions and has prolonged effects on taming housing prices over time. Transfer tax imposition or a decrease in the loan-to-value ratio has short-lived effects on moderating housing markets.

Suggested Citation

  • Chu, Shiou-Yen, 2018. "Macroeconomic policies and housing market in Taiwan," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 404-421.
    • Handle: RePEc:eee:reveco:v:58:y:2018:i:c:p:404-421
    DOI: 10.1016/j.iref.2018.05.002
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    Cited by:

    1. Kai Li & Zhili Ma & Guozhou Zhang, 2019. "Evaluation of the Supply-Side Efficiency of China’s Real Estate Market: A Data Envelopment Analysis," Sustainability, MDPI, vol. 11(1), pages 1-18, January.
    2. Insoo Baek & Sanghyo Lee & Joosung Lee & Jaejun Kim, 2021. "Analysis of Housing Market Dynamics Considering the Structural Characteristics of Mortgage Interest," Sustainability, MDPI, vol. 13(19), pages 1-15, September.
    3. Mustafa Ozan Yıldırım & Mehmet İvrendi, 2021. "Turkish Housing Market Dynamics: An Estimated DSGE Model," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 15(2), pages 238-267, May.
    4. Czerniak, Adam & Borowski, Jakub & Boratyński, Jakub & Rosati, Dariusz, 2020. "Asset price bubbles in a monetary union: Mind the convergence gap," International Review of Economics & Finance, Elsevier, vol. 67(C), pages 288-302.
    5. Guo, Shen & Jiang, Zheng, 2021. "The welfare implications of housing-related tax policies in China," International Review of Economics & Finance, Elsevier, vol. 72(C), pages 135-153.

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    More about this item

    Keywords

    Collateral constraint; Property tax; Transfer tax; Speculation;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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