engleski

A NOTE ON HOUSE PRICES, PROPERTY TAX AND GOVERNMENT EXPENDITURE IN POST-TRANSITION EU COUNTRIES: A PANEL VAR APPROACH

The main aim of this empirical paper is to examine dynamic relationship between house prices, property tax, government expenditure for housing and community amenities and government expenditure on social housing. It is well known that changes on housing markets influence economic growth, wealth inequality and financial stability. Also, the government sector plays a relevant role in the dynamics of real estate markets through taxation, social housing and regulations. To asses this relationship empirically, panel vector autoregression model is used. Panel data on a sample of post-transition EU economies was analysed. Yearly data structured in an unbalanced panel with the longest time span from 2010 to 2019 was used. The variables chosen for the empirical analysis were taken from Eurostat database. With the shocks being identified using the standard recursive identification scheme, empirical estimates show positive response of house prices to government expenditure on housing community amenities and social housing and negative response on property tax. However, this effect is transitory.

PVAR, government expenditure, property tax, house prices

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