Andrew Coleman () (Motu Economic and Public Policy Research)
Abstract
This paper develops an overlapping generations model incorporating credit constraints, owner-occupier and rental sectors, and detailed tax regulations to examine how the interaction of inflation and the tax system affect the housing market. It shows that even modest rates of inflation can have very large effects on the home-ownership rates of young households, particularly at low real interest rates. This occurs even if there is a large supply response in the quantity of housing. The model suggests that the welfare costs of inflation could be ameliorated by exempting the inflation component of interest payments from income tax.
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Paper provided by Motu Economic and Public Policy Research in its series Working Papers with number
08_14.
Find related papers by JEL classification: E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Roger H. Gordon & James R. Hines, Jr. & Lawrence H. Summers, 1987.
"Notes on the Tax Treatment of Structures,"
NBER Chapters,
in: The Effects of Taxation on Capital Accumulation, pages 223-258
National Bureau of Economic Research, Inc.
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