TY  - JOUR
AU  - Broadbent,Ben
AU  - Kremer,Michael
TI  - Does Favorable Tax-Treatment of Housing Reduce Equipment Investment?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6161
PY  - 1997
Y2  - September 1997
UR  - http://www.nber.org/papers/w6161
L1  - http://www.nber.org/papers/w6161.pdf
N1  - Author contact info:
Michael Kremer
Harvard University
Department of Economics
Littauer Center M20
Cambridge, MA 02138
Tel: 617/495-9145
Fax: 617/495-7730
E-Mail: mkremer@fas.harvard.edu
AB  - It is often argued that low tax rates on owner-occupied housing divert investment from equipment.  This paper demonstrates that if people are heterogeneous in their propensity to save, and if there are constraints on borrowing, favorable tax treatment of owner-occupied housing up to a certain value increases equipment investment.  This is because low housing taxes encourage renters to become owner-occupiers, and this leads existing owner-occupiers to shift their portfolio of other assets from rental housing to equipment.
ER  -