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Down-Payment Constraints: Tax Policy Effects in a Growing Economy With Rental and Owner-Occupied Housing

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  • Joel Slemrod

    (University of Minnesota and National Bureau of Economic Research, Cambridge, Massachusetts)

Abstract

This article develops a simulation model of a growing economy where house-holds make life cycle consumption decisions and also choose whether to own or rent housing. A major feature of the model is that newly formed households face a down-payment constraint which may limit the amount of housing they purchase or induce them to rent rather than buy housing. More generally, the constraint may alter the desired path of wealth accumulation. The model is used to simulate the effects of tax policy changes on the steady-state equilibrium, including its capital intensity, its mix of housing and nonhousing capital, and the relative proportion of owned and rental housing.

Suggested Citation

  • Joel Slemrod, 1982. "Down-Payment Constraints: Tax Policy Effects in a Growing Economy With Rental and Owner-Occupied Housing," Public Finance Review, , vol. 10(2), pages 193-217, April.
  • Handle: RePEc:sae:pubfin:v:10:y:1982:i:2:p:193-217
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    Cited by:

    1. Piazzesi, M. & Schneider, M., 2016. "Housing and Macroeconomics," Handbook of Macroeconomics, Elsevier.
    2. Jeremy C. Stein, 1993. "Prices and Trading Volume in the Housing Market: A Model with Downpayment Effects," NBER Working Papers 4373, National Bureau of Economic Research, Inc.
    3. Fumio Hayashi & Takatoshi Ito & Joel Slemrod, 1987. "Housing Finance Imperfections and Private Saving: A Comparative Simulation Analysis of the U.S. and Japan," NBER Working Papers 2272, National Bureau of Economic Research, Inc.
    4. repec:rse:wpaper:v:15:y:2018:i:1:p:37-44 is not listed on IDEAS
    5. Essi Eerola & Niku Määttänen, 2013. "The Optimal Tax Treatment of Housing Capital in the Neoclassical Growth Model," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(6), pages 912-938, December.
    6. Don Fullerton, 1983. "Which Effective Tax Rate?," NBER Working Papers 1123, National Bureau of Economic Research, Inc.
    7. Broadbent, Ben & Kremer, Michael, 2001. "Does favorable tax-treatment of housing reduce non-housing investment?," Journal of Public Economics, Elsevier, vol. 81(3), pages 369-391, September.
    8. Fisher, Patti J. & Montalto, Catherine P., 2010. "Effect of saving motives and horizon on saving behaviors," Journal of Economic Psychology, Elsevier, vol. 31(1), pages 92-105, February.
    9. Scholten, Ulrich, 1999. "Die Förderung von Wohneigentum," Beiträge zur Finanzwissenschaft, Mohr Siebeck, Tübingen, edition 1, volume 8, number urn:isbn:9783161472343, September.
    10. Ross Guest & Robyn Swift, 2010. "Population Ageing and House Prices in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(3), pages 240-253, September.

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