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This paper studies the effects on macroeconomic aggregates of permanent changes
in housing taxes and tax deductions, and in banking regulation through the lens of a
multi-agent dynamic general equilibrium model. Specifically, the housing taxes that
are examined consist in the property and land transfer taxes, and the tax deductions
are the ones that are attached to the mortgage interest rate and imputed rental income.
Our main result is that borrowing-constrained bankers play an important
role for housing dynamics and for welfare improvements. On the contrary with tax
deductions, policies that change housing taxes and banking requirements so that
tax revenues are raised lead to a greater GDP. All policies are welfare-improving for
homeowners, but welfare-diminishing for renters and bankers.
