Over at VoxEU, Jeanne and Korinek discuss a time-varying macro-prudential tax on debt that would internalize and hence reduce the risk of a bust in the market for collateral.
Over at VoxEU, Jeanne and Korinek discuss a time-varying macro-prudential tax on debt that would internalize and hence reduce the risk of a bust in the market for collateral.
2 replies on “Macroprudential taxation”
http://www.irishtimes.com/newspaper/ireland/2010/1130/1224284430850.html?via=rel
From the Irish Independent in October 2008
Speaking at an event organised by the Society of Chartered Surveyors in UCD, John FitzGerald of the Economic and Social Research Institute (ESRI) added that government fiscal policy during the boom years had been incorrect, and was reliant on a temporary boost in property-related revenue in order to cut personal tax rates and fund development.
Mr FitzGerald said the ESRI had recommended to the Government on a number of occasions that, rather than providing mortgage interest relief, it should instead have been taxing mortgages.
Hardly a radical proposal now or then, in a country with it’s own monetary policy, it would be called raising interest rates. All the proposal does is recommend that that government taxes cool the credit market rather than prudential financial regulation. Tax the customer rather than restrict the lender.