Reform of the mortgage interest tax relief system, policy uncertainty and precautionary savings in the Netherlands
We examined the mortgage interest tax relief (MIR) system in the Netherlands and reforms to this system, based on answers to direct questions in survey data for the period 2010-2012. As well as tracking individuals over time and at strategic moments in the process of the policy reform, this unique data set allowed us to isolate the effect of policy uncertainty on precautionary savings and, therefore, on consumption. We found that policy uncertainty alone could increase household buffers in the form of net worth. We estimate that this uncertainty ex ante induces households to increase their net worth by around 6% (EUR 8,000 on average). Although a MIR reform could mitigate this effect on accumulated savings, we also show that reforms that are not credible ex post could exacerbate rather than mitigate the effect on precautionary savings.
|Date of creation:||May 2013|
|Date of revision:|
|Contact details of provider:|| Postal: Postbus 98, 1000 AB Amsterdam|
Web page: http://www.dnb.nl/en/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:dnb:dnbwpp:380. 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: (Rob Vet)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.