Can Property Taxes Reduce House Price Volatility? Evidence from U.S. Regions
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
We use a novel dataset on effective property tax rates in U.S. states and metropolitan statistical areas (MSAs) over the 2005–2014 period to analyze the relationship between property tax rates and house price volatility. We find that property tax rates have a negative impact on house price volatility. The impact is causal, with increases in property tax rates leading to a reduction in house price volatility. The results are robust to different measures of house price volatility, estimation methodologies, and additional controls for housing demand and supply. The outcomes of the analysis have important policy implications and suggest that property taxation could be used as an important tool to dampen house price volatility.
Series:
Working Paper No. 2016/216
Subject:
Econometric analysis Effective tax rate Estimation techniques Housing Housing prices National accounts Prices Property tax Tax policy Taxes
English
Publication Date:
November 10, 2016
ISBN/ISSN:
9781475552799/1018-5941
Stock No:
WPIEA2016216
Pages:
26
Please address any questions about this title to publications@imf.org