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Government intervention in the housing market: Who wins, who loses?

Author

Listed:
  • Floetotto, Max
  • Kirker, Michael
  • Stroebel, Johannes
Abstract
Many U.S. government policies aim to encourage homeownership. We use a general equilibrium model with heterogeneous agents to consider the effects of temporary homebuyer tax credits and the asymmetric tax treatment of owner-occupied and rental housing on prices, quantities, allocations, and welfare. The model suggests that homebuyer tax credits temporarily raise house prices and transaction volumes, but have negative effects on welfare. Removing the asymmetric tax treatment of owner-occupied and rental housing can generate welfare gains for a majority of agents across steady states, but welfare impacts are substantially more varied along the transitions between steady states.

Suggested Citation

  • Floetotto, Max & Kirker, Michael & Stroebel, Johannes, 2016. "Government intervention in the housing market: Who wins, who loses?," Journal of Monetary Economics, Elsevier, vol. 80(C), pages 106-123.
    • Handle: RePEc:eee:moneco:v:80:y:2016:i:c:p:106-123
    DOI: 10.1016/j.jmoneco.2016.04.005
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    References listed on IDEAS

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