Capitalization of Fiscal Variables and Land Scarcity
AbstractFiscal packages usually capitalize into house prices. But if enough land for construction is available, housing developers can supply new houses and capitalization may disappear. We provide a theoretical model in which income taxes and public services capitalize at lower rates when housing supply elasticity increases. Using an empirical linear interaction model, we estimate the impact of available land for construction on capitalization rates with a panel of Swiss communities. Results indicate that fiscal variables do not capitalize differently in communities where housing supply is constrained by land availability. Thus, land availability is not sufficient for capitalization to disappear.
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Bibliographic InfoPaper provided by Center for Research in Economics, Management and the Arts (CREMA) in its series CREMA Working Paper Series with number 2010-03.
Date of creation: Jan 2010
Date of revision:
Capitalization; Land Scarcity; Taxes; Local public goods;
Other versions of this item:
- David Stadelmann & Steve Billon, 2012. "Capitalisation of Fiscal Variables and Land Scarcity," Urban Studies, Urban Studies Journal Limited, vol. 49(7), pages 1571-1594, May.
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
- R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
- H40 - Public Economics - - Publicly Provided Goods - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-03-06 (All new papers)
- NEP-PBE-2010-03-06 (Public Economics)
- NEP-URE-2010-03-06 (Urban & Real Estate Economics)
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- Christoph A. Schaltegger & Frank Somogyi & Jan-Egbert Sturm, 2009.
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CESifo Working Paper Series
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- Christoph A. Schaltegger & Frank Somogyi & Jan-Egbert Sturm, 2009. "Tax Competition and Income Sorting: Evidence from the Zurich Metropolitan Area," KOF Working papers 09-240, KOF Swiss Economic Institute, ETH Zurich.
- Christoph A. Schaltegger & Frank Somogyi & Jan-Egbert Sturm, 2009. "Tax Competition and Income Sorting: Evidence from the Zurich Metropolitan Area," CREMA Working Paper Series 2009-25, Center for Research in Economics, Management and the Arts (CREMA).
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