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on Public Economics |
| By: | Johann K. Brunner (Department of Economics, Johannes Kepler University Linz, Austria); Susanne Pech (Department of Economics, Johannes Kepler University Linz, Austria) |
| Abstract: | The market for private life annuities is characterised by adverse selection, that is, contracts offer lower than fair payoffs to individuals with low life expectancy. Moreover, life expectancy and income have been found to be positively correlated. The paper shows that a linear tax on annuity payoffs, which raises more revenues from long-living individuals than from short-living, represents an appropriate instrument for redistribution, in addition to an optimally designed labour income tax. Further, we find that a nonlinear tax on annuity payoffs can be directly employed to correct the distortion of the rate of return caused by asymmetric information. These results are contrasted with theoretical findings concerning the role of a tax on capital income. |
| Keywords: | Optimum taxation; life annuities; adverse selection |
| JEL: | H2 G2 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2005_06&r=pbe |
| By: | Motchenkova,E. (TILEC (Tilburg Law and Economics Center)) |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubtil:200420&r=pbe |
| By: | Ulrich Thießen |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp518&r=pbe |
| By: | Song, Yan (Department of City and Regional Planning); Zenou, Yves (The Research Institute of Industrial Economics) |
| Abstract: | This article attempts a formal analysis of the connection between property tax and urban sprawl in U.S. cities. We develop a theoretical model that includes households (who are also landlords) and land developers in a regional land market. We then test the model empirically based on a national sample of urbanized areas. The results we obtained from both theoretical and empirical analyses indicate that increasing property tax rates reduces the size of urbanized areas. |
| Keywords: | Urban Sprawl; Full Closed City; Urban Economics; Property Tax; Instrumental Variables |
| JEL: | H30 H71 R14 |
| Date: | 2005–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0648&r=pbe |
| By: | Rodolfo Apreda |
| Abstract: | This paper sets forth a new perspective to address some problems that arise from the mixed governance nature of a state-owned bank. Firstly, it stresses that the principle of subsidiarity is at the root of decision-making processes in which the bank involves itself on the grounds of political demands. Secondly, it focuses on the uses and misuses of the principle of subsidiarity, putting forward the notion of the subsidiarity portfolio to redress misuses and enhance the governance of these institutions. Next, it defines the assets and liabilities portfolios of the bank and, by means of a break-even analysis of those portfolios'returns, inclusive of the costs-benefit structure, it introduces the rate of subsidiarity. Afterwards it moves on to the negative spread to measure up how far the subsidiarity abuse acts upon the return and costs-benefit structure of the bank. Lastly, it enlarges about likages between risk and subsidiarity on the one hand, and quasi-fiscal activities on the other hand. |
| Keywords: | subsidiarity, governance, state-owned banks, spread, quasi-fiscal activities |
| JEL: | G2 H1 G3 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:cem:doctra:308&r=pbe |
| By: | William Jack; Roger Lagunoff |
| Date: | 2005–11–04 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levrem:784828000000000534&r=pbe |
| By: | Dolfsma, W.; Verburg, R. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Abstract: | The tension between (social) order and change, or, alternatively formulated, between structure and agency, has a long history in the social sciences (e.g. Verburg 1991). The discussion has substantial philosophical overtones. In this article we recount the history of the discussion. We both acknowledge the more recent admonition that the agent may have been given short shrift in previous eras (Davis 2003), but at the same time argue that one should not negate the reality of social structure or institutions (Hodgson 1999, 2004). In this article we argue, however, that these recent contributions, from the fields of economics, sociology, political science and management, do not provide a much needed account of how the tension between structure and agency may be resolved conceptually. Accounts seem to emphasize either structure or agency, and fail to capture their interrelationships. We submit that that the process of institutionalization does resolve the tension conceptually, focusing on the role of the agent in reproducing institutional setting, but also in instigating institutional change. We provide a theoretical account of the conditions under which institutions change, and the likely direction of such change. In doing so we emphasize the relation between socio-cultural values subscribed to in a society or community and institutional settings and practices (Dolfsma 2004). As institutions should be conceptualized to have both structural as well as ?cultural? aspects (Neale 1987), in many but not all cases irrevocably related, agents can re-interpret or re-define a given institutional structure in the light of a differing perspective, giving rise to tensions felt and possilbly setting in motion a process of institutional change. |
| Keywords: | Structure;Agency;Institutions;Institutional change;Process;Tensions; |
| Date: | 2005–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:eureri:30007692&r=pbe |
| By: | Ju,Y.; Ruys,P.H.M.; Borm,P. (TILEC (Tilburg Law and Economics Center)) |
| Keywords: | projects;allocation;games |
| JEL: | C71 H70 |
| Date: | 2004 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubtil:200402&r=pbe |
| By: | Boone,J.; Goeree,J.K. (TILEC (Tilburg Law and Economics Center)) |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubtil:200521&r=pbe |
| By: | Nick Netzer; Florian Scheuer |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp516&r=pbe |
| By: | Herwig Immervoll (European Centre for Social Welfare Policy and Research, Vienna and OECD, Paris); Horacio Levy (Universitat Autònoma de Barcelona); José Ricardo Nogueira (Universidade Federal de Pernambuco, Recife); Cathal O´Donoghue (National University of Ireland and IZA, Bonn); Rozane Bezerra de Siqueira (Universidade Federal de Pernambuco) |
| Abstract: | The Brazilian government raises an amount of taxes that represents 35% of GDP and spends more than two-thirds of this on social programmes. These shares are in pair with the OECD averages and well in excess of Latin America averages. However, while the tax-benefit system in OECD countries notably reduces market inequality, in Brazil the government has not been able to significantly alleviate inequality and poverty. This paper investigates the impact of the government budget, particularly taxes and cash transfers, on income distribution in Brazil, and evaluates its efficiency and effectiveness in reducing inequality and poverty. The analysis also illustrates how microsimulation is a useful and powerful method for evaluating the impact of policy on income distribution. |
| JEL: | H22 H23 C81 |
| Date: | 2005–10–21 |
| URL: | http://d.repec.org/n?u=RePEc:got:iaidps:117&r=pbe |
| By: | Philippe De Vreyer (DIAL, Paris); Javier Herrera (DIAL, Paris) |
| Abstract: | We test the effect of local geographic endowment of capital on household growth in living standards in rural Peru, using a four years unbalanced panel data set. Our theoretical model of household consumption growth allows for the effect of community variables to modify the returns to augmented capital in the household production function. Three different sources of data are used: the ENAHO 1997-2000 household surveys, the population census of 1993 and the district infrastructure census of 1997. Altogether the addition of these different data sources makes an unusually rich data set, at least when considered with developing country standards. As in Jalan and Ravallion (2002), we use a quasi-differencing method to identify the impact of locally determined geographic and socioeconomic variables, while removing unobserved household and community level fixed effects. GMM are then used to estimate the model parameters. Several significant interesting results appear, confirming that private consumption growth depends on local geographic variables. |
| JEL: | C33 H23 I18 I32 I38 |
| Date: | 2005–10–21 |
| URL: | http://d.repec.org/n?u=RePEc:got:iaidps:124&r=pbe |
| By: | Drosdowski, Thomas |
| Abstract: | The article examines conditions, under which the degree of democratization influences environmental policy outcomes, with a given resource endowments' heterogeneity as a crucial feature of a politico-economic process. We develop an OLG model with pollution as an aggregate externality. The decisive voter, whose income can differ from the median one, chooses redistribution to finance abatement. By comparing the optimal taxation under alternative political regimes we analyze their implications for environment, efficiency and growth. We find that left regimes, choosing more progressive redistribution, maintain better environmental quality, which supports empirical research. Inequality does not appear to be harmful for the environment, and it dampens the effect of democracy imperfections on redistribution. |
| Keywords: | pollution, political economy, inequality, redistribution, growth |
| JEL: | D31 D63 D72 H23 Q53 Q58 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:han:dpaper:dp-323&r=pbe |
| By: | Lindbeck, Assar (The Research Institute of Industrial Economics) |
| Abstract: | The paper discusses a number of threats to the financial sustainability of social spending: increased internationalization of national economies, gradually higher relative costs of producing a number of human services, the “graying” of the population, slower productivity growth in the private sector, low employment rates, and various types of disincentive effects related to the welfare state itself, including moral hazard. I argue that threats from gradually rising costs of providing human services and disincentive effects of welfare-state arrangements, in particular moral hazard and benefit dependency, are more difficult to deal with than the other threats. I also discuss the choice between ad hoc policy reforms and automatic adjustment mechanisms, delegated to administrative bodies, for dealing with these threats. |
| Keywords: | Sustainable Fiscal Policy; Baumol’s Disease; Moral Hazard; Automatic Adjustment Mechanisms |
| JEL: | E62 H31 H53 |
| Date: | 2005–10–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:0646&r=pbe |
| By: | Eli Berman; David Laitin |
| Abstract: | Who chooses suicide attacks? Though rebels typically target poor countries, suicide attacks are just as likely to target rich democracies. Though many groups have grievances, suicide attacks are favored by the radical religious. Though rebels often kill coreligionists, they seldom use suicide attacks to do so. We model the choice of tactics by rebels, bearing in mind that a successful suicide attack imposes the ultimate cost on the attacker and the organization. We first ask what a suicide attacker would have to believe to be deemed rational. We then embed the attacker and other operatives in a club good model which emphasizes the function of voluntary religious organizations as providers of benign local public goods. The sacrifices which these groups demand solve a free-rider problem in the cooperative production of public goods. These sacrifices make clubs well suited for organizing suicide attacks, a tactic in which defection by operatives (including the attacker) endangers the entire organization. The model also analyzes the choice of suicide attacks as a tactic, predicting that suicide will be used when targets are well protected and when damage is great. Those predictions are consistent with the patterns described above. The model has testable implications for tactic choice of terrorists and for damage achieved by different types of terrorists, which we find to be consistent with the data. |
| JEL: | H56 Z12 D71 D74 H40 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11740&r=pbe |
| By: | Luiz de Mello; Alexander Galetovic |
| Abstract: | Chile’s regulatory framework is working reasonably well. The country’s structural reforms since the 1980s, with the privatisation of utilities and deregulation of product and labour markets, have improved resource allocation and increased the population’s access to basic services, while calling for a comprehensive upgrading of regulatory institutions. At the same time, public-private partnerships (PPPs) are contributing to closing Chile’s infrastructure deficit, particularly in transport. The recurrent cuts in shipments of natural gas from Argentina since 2004 have put additional strain on regulation in the electricity sector to encourage investment in generation and ensure the security of supply. This paper reviews regulatory reform in three network industries (electricity, gas and telecoms), where further liberalisation, particularly in electricity retailing, and improvements in the regulation of telecoms would do much to further improve the business climate. The governance of public-private partnerships can be improved by increasing transparency and accountability in the concession process. In doing so, the government’s exposure to contingent liabilities can be contained. This Working Paper relates to the 2005 OECD Economic Survey of Chile (www.oecd.org/eco/surveys/chile). <P>Renforcer la réglementation au Chili Le cadre de la règlementation chilienne fonctionne assez bien. Les réformes structurelles depuis les années 80, avec la privatisation des services et la réglementation des marchés des produits et du travail, ont amélioré l'allocation des ressources et augmenté l'accès de la population aux services de base, en même temps que modernisé les institutions de réglementation. Parallèlement, les partenariats public-privé ont contribué à réduire le déficit d'infrastructure du Chili, particulièrement dans les transports. Les coupures récurrentes dans les exportations de gaz naturel de l'Argentine depuis 2004 ont ajouté une contrainte sur la réglementation du secteur d'électricité, qui a encouragé l'investissement dans la production et garanti la sécurité de l'offre. Ce document passe en revue les réformes de la réglementation dans trois industries de réseau (électricité, gaz et télécommunication), dans lesquelles plus de libéralisation, particulièrement concernant la vente de détail de l'électricité, et des progrès dans la réglementation des télécommunications, amélioreraient grandement le climat des affaires. La gouvernance des partenariats public-privé peut-être améliorée en augmentant la transparence et la responsabilité du processus de concession. En faisant ainsi le gouvernement évite de s'exposer à d'éventuels passifs. Ce Document de travail se rapporte à l'Étude économique de l'OCDE du Chili, 2005 (www.oecd.org/eco/etudes/chili). |
| Keywords: | telecommunications, télécommunications, network industries, réglementation, industrie de réseau, regulations, electricity, gas, électricité, gaz, Chile, Chili |
| JEL: | D4 H4 K2 |
| Date: | 2005–10–27 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:455-en&r=pbe |
| By: | Alex Gaudeul (University of East Anglia - Norwich & ESRC Centre for Competition Policy) |
| Abstract: | Software is a potentially excludable public good. It is possible, at some cost, to exclude non-paying users from its consumption by using copyright law or technological restraints. Licensing the software under proprietary license terms makes of it a private good, licensing it under the BSD does not change the economic nature of the software while licensing it under the GPL artificially makes of it a pure public good. A project leader will prefer one or the other of those license terms depending on her software project’s market potential and on the cost of developing it. The optimal licensing for a sequence of cumulative innovations and the impact of possible competition between rival software development teams are considered. |
| Keywords: | Open Source Software; Public Goods; Information Goods; Non- Profit; Volunteer Organisation; Intellectual Property; Copyright; Licensing; Innovation |
| JEL: | D23 D45 D71 H41 H42 K11 L31 L86 O31 O32 O34 |
| Date: | 2005–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpio:0511002&r=pbe |
| By: | Maciej Bukowski (Warsaw School of Economics, Institute for Structural Research); Piotr Lewandowski (Warsaw School of Economics, Institute for Structural Research) |
| Abstract: | This paper investigates the determinants of the flows out of employment in Poland using multinomial logit model based on the individual LFS panel data covering the 1997-2004 period. It focuses on the influence of the personal characteristics, macroeconomic environment, industry restructuring and labor market institutions on the individual's labor market prospects. Special attention is devoted to social security benefits and pensions as co-determinants of labor market behavior of older workers. |
| Keywords: | Labor dynamics, transition economies, job destruction, multinomial logit |
| JEL: | J2 H31 |
| Date: | 2005–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpla:0511007&r=pbe |
| By: | Emmanuel Abuelafia (CIPPEC); Sergio Berensztein (Universidad Torcuato di Tella); Miguel Braun (CIPPEC); Luciano di Gresia (Universidad Nacional de La Plata) |
| Abstract: | The budget process is increasingly considered key for reform efforts to improve fiscal outcomes. In this paper we embark on a political economy analysis of the budget process in Argentina, in the spirit of the IDB project “Political Institutions, Policymaking Processes and Policy Outcomes” in order to understand who determines budget outcomes in Argentina. In particular, we seek to characterize the institutional framework that regulates the budget preparation, approval, implementation and control. Furthermore, we identify which actors are involved both formally and informally in the process at each stage, and seek to understand their incentives and interactions. We find that the President has a de facto role that is much more powerful than what the laws and institutions of the budget process stipulate. However, the rigidity of the budget process, together with other constraints such as macroeconomic shocks, fiscal rules, agreements with International Financial Institutions (IFIs) and the influence of other actors such as governors, legislators and lobbies - have limited the ability of the Executive to substantially modify the budget process. Furthermore, compared with the period of high inflation of 1983-1991, in the past decade we have witnessed dramatic improvements in the institutionalization of the budget process, both in political and administrative terms. These reforms have accompanied a strong improvement in fiscal outcomes in the 1990s compared with the 1980s, and provided some of the tools necessary to limit the depth of the recent crisis and regain macroeconomic stability. |
| JEL: | D6 D7 H |
| Date: | 2005–11–08 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwppe:0511004&r=pbe |
| By: | Alexander Harin (Modern University for the Humanities) |
| Abstract: | A man is a key subject of economics and economic theory. “A man is irrational” - this opinion can be made from Allais paradox, risk aversion and other well-known fundamental problems. For a long time, this opinion was a barrier to proper solution of these problems and the development of the economic theory. A radically new approach has been proposed. It considers arrangement infringement possibility as a quite different source of such problems. It opens a quite different way to solve them and remove this barrier. It helps economists to open new and rediscover old fields and trends for the research. |
| Keywords: | “non-ideal” economics, risk, market, bank, industry, development |
| JEL: | C C7 D81 G11 G22 H O |
| Date: | 2005–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwppe:0511005&r=pbe |
| By: | Rolf Aaberge; Ugo Colombino; Erling Holmøy; Birger Strøm; Tom Wennemo |
| Abstract: | Most studies on the economic consequences of ageing rely on Computable General Equilibrium (CGE) models that account for feedback mechanisms through changes in relative prices, tax bases etc. However, since individual labour supply behaviour is considered to be a key element in CGEanalyses of fiscal sustainability problems, the results of these analyses may depend crucially on how the labour supply behaviour is modelled. The current practice of combining a simplified representation of the tax and transfer system with the labour supply behaviour of a few representative agents may render a misleading description of incentives and revenue effects. The purpose of this paper is to demonstrate the importance of using an alternative strategy by integrating a detailed microeconometric model of labour supply, that is sufficiently flexible to capture a large variety of labour supply responses, with a large-scale CGE model. The integrated micro-macro CGE model is employed to explore how endogenous household labour supply behaviour affects and interacts with sustainability problems in Norway. The empirical results suggest that the required increase in the future tax burden is less dramatic when the analysis allows for a flexible representation of the labour supply behaviour. Moreover, by replacing the current progressive tax system with a flat tax system it is found that the pressure on future public finances is significantly reduced. |
| Keywords: | Population Ageing, Fiscal Sustainability, Labour Supply, Computable General, Equilibrium |
| JEL: | D58 H31 H50 J22 |
| Date: | 2004–02 |
| URL: | http://d.repec.org/n?u=RePEc:wpc:wplist:wp06_04&r=pbe |
| By: | Kalina Koleva (MATISSE) |
| Abstract: | Actual fiscal structures' functioning is greatly constrained by some distortions, such as efficiency costs, due to the coercitive nature of tax collection. The mainstream optimal taxation literature ignores, however, the incurring tax system costs. Given these costs and in presence of fiscal evasion and fiscal avoidance, the policy tools' efficiency is clearly diminished. Integrating fiscal avoidance and evasion into normative analysis of taxation means introducing a new set of policy instruments whose optimal setting is at issue. It also invites to consider the theory of "optimal tax systems". In order to study these institutional and societal tax features a methodological reorientation is needed. The effective cost of taxation would be then more visible and thus easier to integrate into public economics topics. Subsequently, this investigation requires a new efficiency costs typology jointly with a revision of social welfare effects. |
| Keywords: | Efficiency costs, fiscal avoidance, fiscal evasion, optimal taxation. |
| JEL: | H20 H21 H26 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:r05050&r=pbe |
| By: | Jean-Christophe Caffet (EUREQua) |
| Abstract: | Most studies on the green tax reform issue point out that environmental taxes exacerbate pre-existing tax distortions, thereby increasing the welfare costs associated with the overall tax code. As a result, the optimal environmental tax should lie below the Pigovian level (or marginal social damages). This article challenges this finding by arguing that health benefits from reduced pollution may sufficiently affect labor supply to create benefit-side tax interactions which, in turn, may be of the same magnitude as cost-side ones. Using a simple general equilibrium model that assumes the existence of a social security system, this paper shows that the optimal environmental tax rate could be greater than traditionally thought. |
| Keywords: | Environmental tax, double dividend, employment, health, social security. |
| JEL: | D60 H21 H23 I18 J22 Q28 |
| Date: | 2005–07 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:v05049&r=pbe |
| By: | Louis Lévy-Garboua (TEAM et CIRANO); David Masclet (CREM - Université de Rennes); Claude Montmarquette (Université de Montréal et CIRANO) |
| Abstract: | A conjecture of Laffer, which had considerable influence on fiscal doctrine, is that tax revenues of a Leviathan state eventually decrease when the tax rate exceeds a threshold value. We conduct a real effort experiment, in which a "worker" is matched with a non-working partner, to elicit the conditions under which a Laffer curve can be observed. We ran four different treatments by manipulating work opportunities and the power to tax. In the endogenous treatment, the non-working partner chooses a tax rate among the set of possibilities and receives the revenue generated by her choice and the worker's effort response to this tax rate. In the exogenous treatment, the tax rate is randomly selected by the computer and the non-working partner merely receives the revenue from taxes. The Laffer curve phenomenon cannot be observed in the exogenous treatments, but arises in endogenous treatments. Tax revenues are then maximized at a 50% tax rate. We demonstrate that an "efficiency tax" model (with or without inequity aversion) falls short of predicting our experimental Laffer curve but an alternative model of social preferences provides a micro-foundation for the latter. This new model endogenously generates a social norm of fair taxation at a 50% tax rate under asymmetric information about workers' type. Taxpayers manage to enforce this norm by working less whenever it has been violated but do not systematically reward "kind" tax setters. Workers who maximize their expected wealth adjust work to the tax rate equitably so that tax revenues remain at a fair level. Workers who respond affectively to norm violations just refuse to work so that tax revenues are cut down. Workers endowed with higher work opportunities tend to respond more emotionally to unfair taxation in our experiment, which is consistent with the observed Laffer curve and with the history of tax revolts. |
| Keywords: | Taxation and labor supply, Laffer curve, experimental economies. |
| JEL: | C72 C91 H30 J22 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:bla05071&r=pbe |
| By: | Clément Carbonnier |
| Abstract: | This paper presents evidence from three French VAT reforms showing that tax shifting on prices operates differently upwards and downwards. This may appear as a paradox when reading usual studies on price shifting. This paper puts forward two different asymmetric effects. The first one is linked to asymmetries in firms' supply curves, which imply that price decreases are smaller than price increases. It occurs because firms decrease their production more easily than they increase it. The second asymmetric effect is linked to asymmetries in customers' demand curves, which react with higher intensity to big price changes than to tenuous ones. Therefore, in markets with monopolistic firms or with collusion - markets that better consider the variations of the demand because of the price making power of firms - price increases are relatively weak in order to prevent the fall of the demand, and price decreases are relatively strong in order to take profit of the takeoff of the demand. This paper shows that this second effect can counteract the first effect in markets with high fixed costs. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2005-34&r=pbe |
| By: | Benno Torgler; Christoph A. Schaltegger |
| Abstract: | ax morale has received a growing attention in academics as well as in public life. The relevance of tax morale for fiscal policy cannot be neglected as tax morale can help to explain the level of tax compliance or tax evasion. This paper gives an overview of tax morale with a special focus on Switzerland. We highlight the magnitude and the de-terminants of tax morale that have been isolated so far and discuss directions for future research in this area. In particular, we concentrate on fiscal policy implications. |
| Keywords: | tax morale; tax compliance; tax evasion; fiscal policy |
| JEL: | H26 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:cra:wpaper:2005-30&r=pbe |
| By: | Guido Wolswijk (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany) |
| Abstract: | This paper analyses some fiscal aspects of mortgage debt in the EU. It first describes the main fiscal instruments that governments use to affect mortgage-financed home-ownership. In the empirical part, real mortgage debt growth is analysed for 15 EU countries using pooled regressions. Fiscal effects are included via after-tax interest rates. Other factors shown to be relevant for mortgage debt growth are house prices, financial deregulation, and stock markets while the effects of household income and inflation are less evident. Finally, the role of structural fiscal measures in reducing housing market volatility is highlighted. |
| Keywords: | Mortgage credit; loans; tax policy; income tax; interest deductibility. |
| JEL: | E51 E62 G21 H31 R21 |
| Date: | 2005–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20050526&r=pbe |