On the long-term effect of recent housing policies in Korea

Byoung Hoon Seok, Hye Mi You

Research output: Contribution to journalArticlepeer-review

Abstract

This paper explores the long-term effect of recent housing policies in Korea. Using a two-sector general equilibrium model with heterogeneous agents, we conduct three policy experiments: i) a reduction in the loan-to-value (LTV) ratio; ii) an increase in the house acquisition tax rate; iii) an increase in the property tax rate. We find that all three policies increase the relative price of housing structures in the long run, yet their quantitative effect is small, and that the reduced LTV ratio is effective in reducing the household debt. Heterogeneous responses to these policies depending on household wealth are crucial in these results.

Original languageEnglish
Pages (from-to)199-223
Number of pages25
JournalKorean Economic Review
Volume37
Issue number2
DOIs
StatePublished - 2021

Keywords

  • Heterogeneous Agents
  • House Prices
  • Household Debt
  • Housing Policies

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