Housing, collateral constraints, and fiscal policy
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Date
2013-06-20
Authors
Polattimur, Hamza
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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 fisscal policy should
disburden constrained borrowers by subsidizing their
housing.
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Keywords
Collateral Constraints, Housing, Optimal Fiscal Policy