Tax Incentives and House Price Volatility in the Euro Area [E-Book]: Theory and Evidence / Paul van den Noord
van den Noord, Paul.
Paris : OECD Publishing, 2003
17 p. ; 21 x 29.7cm.
OECD Economics Department Working Papers ; 356
Euro Area
Full Text
A problem associated with inflation differentials in monetary unions is that the "crowding-in" effect of lower real interest rates associated with high inflation will initially outweigh the loss of competitiveness (crowding out). The crowding-in effect may produce volatility in house prices, especially if tax regimes favour the occurrence of bubbles. This paper shows that this is the case notably in the smaller countries of the euro area, and this could explain the persistence of inflation differentials in the area to some extent ...