Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/182023
Authors: 
Bielecki, Marcin
Stähler, Nikolai
Year of Publication: 
2018
Series/Report no.: 
Bundesbank Discussion Paper 30/2018
Abstract: 
We use a New Keynesian DSGE model with search frictions on the housing market to evaluate how financing a labor tax reduction by higher property taxation affects the real economy and welfare. Search on the housing market enables us to explicitly model stocks and flows, which is necessary to differentiate between recurrent property taxes (levied on stocks) and property transaction taxes (levied to flows). We find that using recurrent property taxation as financing instrument outperforms other instruments although all policy measures increase aggregate economy-wide welfare. Our simulations suggest that using property transaction taxation as financing instrument is the least favorable measure.
Subjects: 
Search Frictions in Housing Markets
Property Taxation
Tax Reform
General Equilibrium
JEL: 
E51
E6
R31
K34
ISBN: 
978-3-95729-489-0
Document Type: 
Working Paper
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