Land

Private wealthWealth, private is comprised in part of capitalized future land rentsLand rents. The Golden Rule of AccumulationGolden rule of accumulation is preserved even if we introduce land into our meta-modelMeta-model. Urban landLand, urban is far more valuable than agricultural landLand. The riskRisk tied to land leads to a reduction in its value in the form of a “risk premiumRisk premium” α > 0. Land rentsLand rents can be taxed without any possibility of the tax being passed on to tenants and without loss of efficiency. If the tax is offset by a reduction in income tax, their taxation can even give rise to efficiency gains and positive distributive effects. The possibility of government intervention in the residential rental market represents a further risk for landowners. The sensitivity of the value of land to changes in the interest rate and hence the risk premiumRisk premium α rise with falling interest rates. In light of these many different risksRisk, landLand as investment can only to a limited extent be a substitute for government bonds and hence for increasing private wealthWealth, private by way of public debt. We calculate the value of landLand as asset category in the OECD plus ChinaChina region. To this end, we primarily rely on data from statistical offices that provide figures for land in their national balance sheets. Our calculations show that the value of land in the countries of the OECD plus ChinaChina region is about twice annual consumption in the region.