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The CEPII Newsletter       
April 2018        

The French edition is slightly different as it also includes material available in French only  

Europe Monnaie & Finance Trade & Globalization Migrations Economic Policy Emerging Economies Competitivness & Growth Environment & Natural Ressources

A 1% of GDP increase in property taxes leads to a 3% reduction in output on average in 3-4 years

By what mechanisms can a tax increase lead to a decline in activity? In this CEPII Working Paper, François Geerolf & Thomas Grjebine first observe a very negative effect on consumption (-3.5% after 3 years). Part of this decline is undoubtedly due to the direct decline in agents' disposable income. But the measured decline far exceeds the single tax increase on homeowners, since consumption accounts for about 60% of GDP (the direct effect would therefore be at most 1% / 0.6 = 1.7%). This suggests the multiplier effects, such as an initial drop in consumption leads to a fall of aggregate demand, which in turn impacts consumption through a decline in demand for labor, leading to more unemployment. The effect on non-residential investment is also very important, with a decline of nearly 11% after 3 years. If a rise in the property tax leads to a fall in consumption and investment, it also reduces imports almost immediately (-10.6% after 3 quarters). Property tax changes finally have a significant effect on real estate prices. According to our estimates, a tax increase of 1% of GDP leads to a fall in property prices (adjusted for inflation) by 17% after 3 years. >>>

CEPII 40th Anniversary Conference : France and Europe in Globalization

Ten years after the crisis, the international economic relationships are being deeply transformed in many areas such as the economic and financial stability, international competitiveness, migration flows and the climate change challenge. What are major challenges that France and Europe are facing in today’s context? To address this question, the CEPII organizes, on the occasion of its 40th anniversary, three panel discussions, each bringing together three experts, foreign and French, decision-makers and academics. Programme


Country Profiles

The CEPII Country Profiles offer a unique synthesis of information on the international integration of 80 economies. The proposed indicators, based on CEPII's original databases, make it possible to characterise changes in market shares or the structure of exports since 1967 as well as to analyse the ranges of products exported or trade protection in international comparison. These data, provided in the form of easily downloadable tables and graphs, are intended for information, expertise and teaching. The update of the data with the addition of data for 2016 is now available.

ISSN: 1255-7072
Editorial Director : Christophe Destais
Managing Editor : Dominique Pianelli