Mortgage interest deductions? Not a bad idea after all

• 成果类型: Article
• 署名作者: Rotberg, Shahar; Steinberg, Joseph B.
• 署名单位: University of Toronto
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2024.01.004
• 发表日期: 2024
• 关键词: Mortgage interest deduction; Rental supply elasticity; Rent-to-income ratio; Homeownership; welfare

摘要

Mortgage interest deductions and other homeownership subsidies are widely believed to be harmful because they redistribute resources from lower-income renters to higher-income homeowners. We argue that renters actually benefit from these policies in general equilibrium for two reasons. First, the rental supply curve is relatively inelastic, which means that rents fall when these policies reduce rental demand. Second, many renters spend most of their income on housing, and these renters gain substantially from rent decreases. We calibrate a quantitative model to match empirical evidence on these factors and show they are strong enough that subsidizing homeownership actually increases welfare.