Speaker：Dr Chuan Yong ZHANG

Site:B129

Time：10：00-11:30 Friday Nov.17 2017

Abstract:This paper contributes to the literature by identifying the causal effect of residential tax reform on housing price. Although economic theory implies that differences in residential transaction tax rates should be fully capitalized, empirical support for this proposition is uneven. This paper builds a search model that links the bargain power and reduction of transaction tax in a partial equilibrium model. The model indicates that the tax reduction will increase the transaction price, and to what extent the increase benefit goes to the buyer or seller is determined by the bargain power. Then we treat this tax reduction as one natural experiment and find that after March 1st, 2012, the threshold date, transaction prices of the NRP increased significantly compared with those of Non-NRP. Specifically, transaction prices of NRP increased by 2.5%, moreover, prices of smaller-than-90-m2 NRP increased much higher than those of larger-than-90-m2 NRP. We document some heterogeneity of the effect across geographic areas and various floor areas and find that this effect is stronger from the inner belt to the outer belt than other areas with smaller floor areas.