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House prices and immovable property tax: Evidence from OECD countries
Author(s) -
Oliviero Tommaso,
Sacchi Agnese,
Scognamiglio Annalisa,
Zazzaro Alberto
Publication year - 2019
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12253
Subject(s) - immovable property , economics , property tax , revenue , tax revenue , panel data , house price , monetary economics , property (philosophy) , macroeconomics , econometrics , finance , philosophy , epistemology
This paper studies the impact of changes in immovable property tax revenues on the growth rate of house prices by analysing a panel of 34 OECD countries over the period 1970–2014. Starting from the annual series of immovable property tax revenues, we isolate years of significant shifts in the property tax regime and study their impact on house prices. We find a strong negative relationship between increases in immovable property tax revenues and house prices. This relationship is robust to the inclusion of cyclical determinants of house prices, country and year fixed effects, and country‐specific linear trends. We also propose an instrumental variable strategy based on countries’ legal origins that confirms a statistically significant negative impact of such taxes in the short run.