Incentives to Borrow and the Demand for Mortgage Debt: An Analysis of Tax Reforms
AbstractBefore 1992 mortgage interest in Italy was fully tax deductible up to 3,500 euro (7,000 for two cosigners). Between 1992-94 the government implemented a series of tax reforms whose ultimate effect was to cancel the relation between the after-tax mortgage rate and the marginal tax rate. Using data from the 1987-2000 Survey of Household Income and Wealth we test if the cancellation of incentives has reduced the propensity to borrow of high-income taxpayers relative to the other population groups. Difference-in-differences estimates and regression analysis indicate that tax considerations have not affected the demand for mortgage debt, either at the extensive or intensive margin.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3903.
Date of creation: May 2004
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Other versions of this item:
- Tullio Jappelli & Luigi Pistaferri, 2002. "Incentives to Borrow and the Demand for Mortgage Debt: An Analysis of Tax Reforms," CSEF Working Papers 90, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- D91 - Microeconomics - - Intertemporal Choice - - - Intertemporal Household Choice; Life Cycle Models and Saving
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-13 (All new papers)
- NEP-MIC-2004-06-13 (Microeconomics)
- NEP-URE-2004-06-13 (Urban & Real Estate Economics)
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