dc.contributor.author | Sommervoll, Dag Einar | |
dc.date.accessioned | 2011-11-13T10:48:09Z | |
dc.date.available | 2011-11-13T10:48:09Z | |
dc.date.issued | 2007 | |
dc.identifier.issn | 1892-753x | |
dc.identifier.uri | http://hdl.handle.net/11250/180593 | |
dc.description.abstract | Abstract:
A number of European countries changed their tax system in the early 1990s along the lines of the
US tax reform act of 1986. After the reforms marginal tax rates were generally lower, and mortgage
interest deductions less generous. At the same time a long period of house appreciation started in
most countries. This paper considers this puzzle empirically using a rich data base of Norwegian tax
records from 1986 to 2000. We use nonparametric, difference in difference and tobit approaches in
attempt to control for a wide array of factors that may offset, or mask, response to changed
incentives. Of special concern is possible credit constrains as implied by credit score models
routinely applied by credit institutions. We find a surprisingly static relationship between the
probability of debt across age groups, and a strikingly linear and unchanged relationship between
debt and gross income for young households. After the reform house prices doubled and tripled. The
wealth effect may spur consumption. We find no sign of consumption smoothing by using self-owned
housing as debt collateral, not even for older households. On the contrary, older households did
react to the reform by reducing real debt.
Keywords: Tax incentives; credit rationing; mortgage market, household debt | no_NO |
dc.language.iso | eng | no_NO |
dc.publisher | Statistics Norway, Research Department | no_NO |
dc.relation.ispartofseries | Discussion Papers;No. 492 | |
dc.subject | Household debt | no_NO |
dc.subject | House prices | no_NO |
dc.subject | Norway | no_NO |
dc.subject | Credit rationing | no_NO |
dc.subject | Mortgage market | no_NO |
dc.subject | JEL classification: D91 | no_NO |
dc.subject | JEL classification: H20 | no_NO |
dc.title | Counterintuitive response to tax incentives? Mortgage interest deductions and the demand for debt | no_NO |
dc.type | Working paper | no_NO |
dc.subject.nsi | VDP::Social science: 200::Economics: 210::Economics: 212 | no_NO |
dc.source.pagenumber | 27 s. | no_NO |