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Strategic Interaction between Inter Vivos Gifts and Housing Acquisition

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  • Norifumi Yukutake
  • Shinichiro Iwata
  • Takako Idee
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    Abstract

    To consider the policy event of a gift tax reduction earmarked for housing acquisition, the interdependence of parental gifts and children's housing investments is modeled, considering an informal care issue behind such decision making. The empirical results, which use a sample of households who purchased a house in Japan, demonstrate that such a tax cut would appear to have the following limited effects on boosting housing investment in equilibrium. First, even though transfers are encouraged, they consequently reduce housing investment because the housing investment function is negatively related to gifts. Second, increments in housing investment are further discouraged because the slopes of the gift and housing investment functions have opposite signs.

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    File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd11-201.pdf
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    Bibliographic Info

    Paper provided by Institute of Economic Research, Hitotsubashi University in its series Global COE Hi-Stat Discussion Paper Series with number gd11-201.

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    Date of creation: Aug 2011
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    Handle: RePEc:hst:ghsdps:gd11-201

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    Keywords: Intergenerational Transfer; Housing Investment; Gift Tax;

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