Residential Investment And Property Tax Reform

This paper set up a two-sector RBC model with non-durable goods production sector and residential construction sector.The aim is to discuss the choice of taxes by central government under the framework of Ramsey taxation.Parameters are calibrated to the Chinese Economy and numerical simulation show that an increase in property tax rate combined with the reduction in other taxes' rate(capital income tax or labor income tax) can improve the social wealfare.It also displays the transitional dynamics of the property tax reform under the presence of TFP shocks.