The Role of Capital Gains Taxes in the Housing Bubble
Posted: 22 Oct 2011 Last revised: 27 Aug 2012
Date Written: October 17, 2011
Capital gain taxes are integrated into an excess-bid model to develop an analytical narrative of the housing market crash. Housing data is used to support the narrative. The paper concludes that sudden changes in capital gains tax rates can cause formed bubbles to burst. Research recommends gradual changes in capital gain taxes rather than one-time changes.
Keywords: taxes, housing, public economics
JEL Classification: H20
Suggested Citation: Suggested Citation