Saturday, 16 November 2013

Unlikely land taxers: Bank for International Settlements

Via Carol W via rwer, from the Bank for International Settlements:

Can non-interest rate policies stabilise housing markets? Evidence from a panel of 57 economies

by Kenneth N Kuttner and Ilhyock Shim
Working Papers No 433
November 2013

Using data from 57 countries spanning more than three decades, this paper investigates the effectiveness of nine non-interest rate policy tools, including macroprudential measures, in stabilising house prices and housing credit.

In conventional panel regressions, housing credit growth is significantly affected by changes in the maximum debt-service-to-income (DSTI) ratio, the maximum loan-to-value ratio, limits on exposure to the housing sector and housing-related taxes. But only the DSTI ratio limit has a significant effect on housing credit growth when we use mean group and panel event study methods.

Among the policies considered, a change in housing-related taxes is the only policy tool with a discernible impact on house price appreciation.


Lola said...


Kj said...

Seems like they're basing this on actual economics. What a refreshing approach.

Mark Wadsworth said...

L, indeed.

Kj, better than that, they are basing it on actual facts. Proper "economics" merely seeks to explain existing observed facts and recognise patterns.

DBC Reed said...

The problem appears to be that the people at the top: the IMF OECD and now this lot back LVT and the grass roots hard-scrabble controversialists at the bottom (ourselves) favour LVT.But nobody in between: governments, the Treasury in the UK ,the political parties, the salaried Economists. Anybody who can be bought basically.

Lola said...

I tried to get the Financial Catastrophe Authority bureaucrats wot I met recently to think about LVT, and......well, you couldn't really tell what they could understand, they were that clueless. Clever mind you, but clueless.

Mark Wadsworth said...

DBC, they can't afford to buy us all off, that's the good news.

L, but next time you can refer them to their elders and betters, the IMF, BIS, OECD and so on.