Incentives to Borrow and the Demand for Mortgage Debt: An Analysis of Tax Reforms

Tullio Jappelli () and Luigi Pistaferri

No 3903, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Before 1992 mortgage interest in Italy was fully tax deductible up to 3,500 euro (7,000 for two cosigners). Between 1992-94 the government implemented a series of tax reforms whose ultimate effect was to cancel the relation between the after-tax mortgage rate and the marginal tax rate. Using data from the 1987-2000 Survey of Household Income and Wealth we test if the cancellation of incentives has reduced the propensity to borrow of high-income taxpayers relative to the other population groups. Difference-in-differences estimates and regression analysis indicate that tax considerations have not affected the demand for mortgage debt, either at the extensive or intensive margin.

Keywords: Mortgage debt; Tax incentives; Borrowing (search for similar items in EconPapers)
JEL-codes: D91 H20 (search for similar items in EconPapers)
Date: 2004-05
New Economics Papers: this item is included in nep-mic and nep-ure
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://cepr.org/publications/DP3903 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Incentives to Borrow and the Demand for Mortgage Debt: An Analysis of Tax Reforms (2002)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:3903

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP3903

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().