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Recent reforms in Spanish housing markets: an evaluation using a DSGE model

Mora-Sanguinetti, Juan S.; Rubio, Margarita

Authors

Juan S. Mora-Sanguinetti juans.mora@bde.es

Margarita Rubio Margarita.Rubio@nottingham.ac.uk



Abstract

After a long academic debate, Spain finally repealed in 2012 the deduction for home purchase. The abrogation took effect in 2013. In parallel, the VAT for the purchase of new housing was increased after a short period in which it had a reduced rate. The aim of this paper is to assess the macroeconomic effects of these two relevant housing market reforms. In order to do that, we use a dynamic stochastic general equilibrium (DSGE) model calibrated to capture the key ratios of the Spanish economy. The model includes a housing market, covering both the rental market side and the property market side and credit-constrained agents. We find that these measures drive down housing prices and have a negative impact on output and employment in the construction sector. However, in the long run, this last effect is offset by the benefits of a reduction in distortionary taxes.

Journal Article Type Article
Publication Date Aug 5, 2014
Journal Economic Modelling
Print ISSN 0264-9993
Electronic ISSN 0264-9993
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 44
Issue Supp.1
Article Number S42-S49
APA6 Citation Mora-Sanguinetti, J. S., & Rubio, M. (2014). Recent reforms in Spanish housing markets: an evaluation using a DSGE model. Economic Modelling, 44(Supp.1), doi:10.1016/j.econmod.2014.04.028
DOI https://doi.org/10.1016/j.econmod.2014.04.028
Keywords Housing Market Reforms, Rental Market, House Prices, Home Purchase Deduction, VAT on New Home Purchase
Publisher URL http://www.sciencedirect.com/science/article/pii/S0264999314002478
Copyright Statement Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0





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