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Housing, Collateral Constraints, and Fiscal Policy

Author

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  • Hamza Polattimur

    () (Technical University Dortmund, Germany)

Abstract

This paper studies the preferential tax treatment of housing that can be ob- served in many industrialized countries. It provides a rationale for it by means of an optimal taxation approach, taking into account an important feature of housing, namely its usage as collateral. In a borrower-lender framework, where private loans are assumed to be non-enforceable and have to be collat- eralized by housing, optimal fiscal policy should disburden constrained bor- rowers by subsidizing their housing.

Suggested Citation

  • Hamza Polattimur, 2013. "Housing, Collateral Constraints, and Fiscal Policy," Ekonomi-tek - International Economics Journal, Turkish Economic Association, vol. 2(2), pages 53-82, May.
  • Handle: RePEc:tek:journl:v:2:y:2013:i:2:p:53-82
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    File URL: http://ekonomitek.org/pdffile/no5_09_hamza_polattimur.pdf
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    References listed on IDEAS

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    1. Gervais, Martin, 2002. "Housing taxation and capital accumulation," Journal of Monetary Economics, Elsevier, vol. 49(7), pages 1461-1489, October.
    2. Morris A. Davis, 2010. "housing and the business cycle," The New Palgrave Dictionary of Economics, Palgrave Macmillan.
    3. Matteo Iacoviello, 2005. "House Prices, Borrowing Constraints, and Monetary Policy in the Business Cycle," American Economic Review, American Economic Association, vol. 95(3), pages 739-764, June.
    4. Mendoza, Enrique G. & Razin, Assaf & Tesar, Linda L., 1994. "Effective tax rates in macroeconomics: Cross-country estimates of tax rates on factor incomes and consumption," Journal of Monetary Economics, Elsevier, vol. 34(3), pages 297-323, December.
    5. Kiyotaki, Nobuhiro & Moore, John, 1997. "Credit Cycles," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 211-248, April.
    6. 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.
    7. Green, Richard K. & White, Michelle J., 1997. "Measuring the Benefits of Homeowning: Effects on Children," Journal of Urban Economics, Elsevier, vol. 41(3), pages 441-461, May.
    8. DiPasquale, Denise & Glaeser, Edward L., 1999. "Incentives and Social Capital: Are Homeowners Better Citizens?," Journal of Urban Economics, Elsevier, vol. 45(2), pages 354-384, March.
    9. Poterba, James M, 1992. "Taxation and Housing: Old Questions, New Answers," American Economic Review, American Economic Association, vol. 82(2), pages 237-242, May.
    10. Brian A. Jacob & Jens Ludwig, 2012. "The Effects of Housing Assistance on Labor Supply: Evidence from a Voucher Lottery," American Economic Review, American Economic Association, vol. 102(1), pages 272-304, February.
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    More about this item

    Keywords

    Housing; collateral constraints; optimal fiscal policy;

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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