Housing, Collateral Constraints, and Fiscal Policy
Authors : Hamza Polattimur
Pages : 53-81
View : 11 | Download : 3
Publication Date : 2013-05-01
Article Type : Research
Abstract :This paper studies the preferential tax treatment of housing that can be observed in many industrialized countries. It provides a rationale for it by means of an optimal taxation approach, taking into account an important feature of housing, namely its usage as collateral. In a borrower-lender framework, where private loans are assumed to be non-enforceable and have to be collateralized by housing, optimal fiscal policy should disburden constrained borrowers by subsidizing their housing.Keywords : Housing, collateral constraints, optimal fiscal policy