Impact of Fiscal Policy on Residential Investment in France
The present paper assesses the impact of fiscal policy on residential investment in France. The analysis is conducted in the framework of a VECM, since this allows accounting for endogeneity between the variables. Our results imply that a long term relationship between investment and subsidies exists, making subsidies an adequate measure to influence residential investment and hence the business cycle. In addition, a disaggregated approach taking into account several different types of fiscal measures highlights that tax and interest rate subsidies are the most efficient fiscal tool for influencing residential investment. When accounting for financial factors by means of households' borrowing capacity, we find that the latter also impacts residential investment positively. Moreover, this alternative specification underlines the robustness of the above mentioned results, as it confirms subsidies as the most efficient measure to influence residential investment.
|Date of creation:||2009|
|Contact details of provider:|| Postal: Banque de France 31 Rue Croix des Petits Champs LABOLOG - 49-1404 75049 PARIS|
Web page: http://www.banque-france.fr/
More information through EDIRC
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.:
- Edward E. Leamer, 2008. "What's a Recession, Anyway?," NBER Working Papers 14221, National Bureau of Economic Research, Inc.
- Serena Ng & Pierre Perron, 2001.
"LAG Length Selection and the Construction of Unit Root Tests with Good Size and Power,"
Econometric Society, vol. 69(6), pages 1519-1554, November.
- Serena Ng & Pierre Perron, 1997. "Lag Length Selection and the Construction of Unit Root Tests with Good Size and Power," Boston College Working Papers in Economics 369, Boston College Department of Economics, revised 01 Sep 2000.
- Morris A. Davis, 2010. "housing and the business cycle," The New Palgrave Dictionary of Economics, Palgrave Macmillan.
- Davis, Morris & Heathcote, Jonathan, 2001. "Housing and the Business Cycle," Working Papers 01-09, Duke University, Department of Economics.
- Morris A. Davis & Jonathan Heathcote, 2004. "Housing and the business cycle," Finance and Economics Discussion Series 2004-11, Board of Governors of the Federal Reserve System (U.S.).
- Jonathan Heathcote, 2003. "Housing and the Business Cycle," Working Papers gueconwpa~03-03-21, Georgetown University, Department of Economics.
- Chu-Chia Lin & Sue-Jing Lin, 1999. "An Estimation of Elasticities of Consumption Demand and Investment Demand for Owner-Occupied Housing in Taiwan : A Two-Period Model," International Real Estate Review, Asian Real Estate Society, vol. 2(1), pages 110-125.
- Paul van den Noord, 2005. "Tax Incentives and House Price Volatility in the Euro Area: Theory and Evidence," Economie Internationale, CEPII research center, issue 101, pages 29-45.
- Paul van den Noord, 2003. "Tax Incentives and House Price Volatility in the Euro Area: Theory and Evidence," OECD Economics Department Working Papers 356, OECD Publishing.
- Miles, David K, 1993. "House Prices, Personal Sector Wealth and Consumption: Some Conceptual and Empirical Issues," The Manchester School of Economic & Social Studies, University of Manchester, vol. 61(0), pages 35-59, Suppl..
- António AFONSO & Ricardo SOUSA, "undated". "Fiscal Policy, Housing and Stock Prices," EcoMod2010 259600005, EcoMod.
- António Afonso & Ricardo M. Sousa, 2008. "Fiscal Policy, Housing and Stock Prices," Working Papers Department of Economics 2008/58, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
- Afonso, António & Sousa, Ricardo M., 2009. "Fiscal policy, housing and stock prices," Working Paper Series 990, European Central Bank.
- Ricardo M. Sousa & António Afonso, 2008. "Fiscal Policy, Housing and Stock Prices," NIPE Working Papers 21/2008, NIPE - Universidade do Minho.
- Zvi Hercowitz & Jeffrey C. Campbell, 2005. "The Role of Collateralized Household Debt in Macroeconomic Stabilization," 2005 Meeting Papers 120, Society for Economic Dynamics.
- Jeffrey R. Campbell & Zvi Hercowitz, 2005. "The Role of Collateralized Household Debt in Macroeconomic Stabilization," NBER Working Papers 11330, National Bureau of Economic Research, Inc.
- John Muellbauer & Anthony Murphy, 2008. "Housing markets and the economy: the assessment," Oxford Review of Economic Policy, Oxford University Press, vol. 24(1), pages 1-33, spring.
- Nathalie Girouard & Sveinbjörn Blöndal, 2001. "House Prices and Economic Activity," OECD Economics Department Working Papers 279, OECD Publishing.
- Henderson, J Vernon & Ioannides, Yannis M, 1983. "A Model of Housing Tenure Choice," American Economic Review, American Economic Association, vol. 73(1), pages 98-113, March. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:bfr:banfra:270. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael brassart)
If references are entirely missing, you can add them using this form.