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Impact of Fiscal Policy on Residential Investment in France

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  • Pamfili Antipa
  • Schalck, C.

Abstract

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.

Suggested Citation

  • Pamfili Antipa & Schalck, C., 2009. "Impact of Fiscal Policy on Residential Investment in France," Working papers 270, Banque de France.
    • Handle: RePEc:bfr:banfra:270
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    References listed on IDEAS

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    1. repec:hal:spmain:info:hdl:2441/7o52iohb7k6srk09mgl1k0t17 is not listed on IDEAS
    2. repec:spo:wpmain:info:hdl:2441/7o52iohb7k6srk09mgl1k0t17 is not listed on IDEAS
    3. lvarez, L-J. & Bulligan, G. & Cabrero, A. & Laurent Ferrara & Stahl, H., 2009. "Housing cycles in the major euro area countries," Working papers 269, Banque de France.

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    More about this item

    Keywords

    Fiscal policy; residential investment; VECM.;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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