Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/214461 
Year of Publication: 
2010
Series/Report no.: 
CREMA Working Paper No. 2010-03
Publisher: 
Center for Research in Economics, Management and the Arts (CREMA), Basel
Abstract: 
Fiscal packages usually capitalize into house prices. But if enough land for construction is available, housing developers can supply new houses and capitalization may disappear. We provide a theoretical model in which income taxes and public services capitalize at lower rates when housing supply elasticity increases. Using an empirical linear interaction model, we estimate the impact of available land for construction on capitalization rates with a panel of Swiss communities. Results indicate that fiscal variables do not capitalize differently in communities where housing supply is constrained by land availability. Thus, land availability is not sufficient for capitalization to disappear.
Subjects: 
Capitalization
Land Scarcity
Taxes
Local public goods
JEL: 
R21
R31
H40
Document Type: 
Working Paper

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