How Do Stamp Duties Affect the Housing Market?

@article{Davidoff2013HowDS,
  title={How Do Stamp Duties Affect the Housing Market?},
  author={Ian Davidoff and Andrew Leigh},
  journal={Macroeconomics: Employment},
  year={2013}
}
Land transfer taxes are a substantial portion of the cost of moving house in many developed countries. Since stamp duties are endogenous with respect to the house price, we create an instrumental variable that is the stamp duty on a property, given that postcode's starting house price and the national house price trend. In a specification with postcode and year fixed effects, this instrument effectively captures policy changes and nonlinearities in the stamp duty schedule. We find that the… Expand
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