Housing, prices and tax policy in Spain

This paper analyses the consequences of different tax policies upon the evolution of housing prices and residential capital stock (in the form of home ownership) in Spain. The framework is a computational aggregate model of housing as an asset. Policies under consideration are the removal of housing subsidies implicit in the personal income tax and the introduction of "investment incentives" in housing (i.e., policies addressed specifically to newly-produced housing). Both long-run effects and dynamic trajectories are discussed herein. With regards to the latter, distinction is made between those situations in which economic agents have rational expectations (i.e., perfect foresight) and static expectations. © Springer-Verlag 2004.