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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



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After a long academic debate, Spain finally repealed in 2012 the deduction for home purchase.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.

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

Journal Article Type Article
Publication Date Aug 5, 2014
Deposit Date Sep 7, 2015
Publicly Available Date Sep 7, 2015
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
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
Public URL http://eprints.nottingham.ac.uk/id/eprint/29823
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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