Government Intervention in the Housing Market: Who Wins, Who Loses?
New York University (NYU)
March 30, 2010
We study the effects of government intervention in the housing market on prices, quantities and welfare in a general equilibrium model with heterogeneous agents. We consider (i) the introduction of temporary home purchase tax credits and (ii) a removal of the asymmetric tax treatment of owner-occupied and rental housing. Home buyer tax credits temporarily raise house prices and transaction volumes, but have negative welfare effects. Removing the asymmetric tax treatment of owner-occupied and rental housing generates welfare gains for a majority of agents in a comparison of stationary equilibria. Welfare impacts are more varied, though still positive, along the transition between steady states
Number of Pages in PDF File: 47
Keywords: Housing Market, Mortgage Interest Deductibility, Imputed Rents, Home Purchase Tax Credits, Policy Evaluation, Transition between Steady States
JEL Classification: C6, E21, E6, H21, R21working papers series
Date posted: April 2, 2010 ; Last revised: November 21, 2013
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