# RECORD a842ed7c689fc0985af5ca73c3f97f4279427db3
# TITLE: Influence of a special tax-cooling measure on housing prices in Taiwan: a hedonic pricing model with consideration of the spillover effect
# YEAR: 2025.0  VENUE: Japanese Economic Review  DOI: 10.1007/s42973-025-00217-5
# AUTHORS: Yiwen Yang
# PAGES: 44  CANDIDATE TABLE PAGES (1-based): [18, 24, 26, 27, 30, 32, 33, 34, 35, 36]
# ABSTRACT: 
 To limit excessive real estate speculation and curb rising real estate property prices in Taiwan, in June 2011, the government imposed a transaction tax (i.e., the Specifically Selected Goods and Services Tax; SSGST) on short-term real estate transactions. The findings in the literature on the effects of transaction taxation on housing prices are inconsistent. To investigate the influence of the SSGST on real estate market prices in Taiwan, we adopted the hedonic pricing model, which can be used to determine the effects of houses’ intrinsic characteristics on their prices, and used merged administrative data. The results demonstrate that the special ad valorem tax was effective in reducing housing prices in short-term transactions, with larger declines observed at higher tax rates. Furthermore, its influence gradually extended to the broader housing market. However, housing prices in municipalities under the control of the central government were less sensitive to the SSGST policy.


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Vol.:(0123456789)
The Japanese Economic Review
https://doi.org/10.1007/s42973-025-00217-5
ARTICLE
Influence of a special tax‑cooling measure 
on housing prices in Taiwan: a hedonic pricing model 
with consideration of the spillover effect
Yiwen Yang1 
Received: 3 March 2024 / Revised: 4 May 2025 / Accepted: 12 June 2025 
© The Author(s) 2025
Abstract
To limit excessive real estate speculation and curb rising real estate property prices 
in Taiwan, in June 2011, the government imposed a transaction tax (i.e., the Specifi-
cally Selected Goods and Services Tax; SSGST) on short-term real estate transac-
tions. The findings in the literature on the effects of transaction taxation on hous-
ing prices are inconsistent. To investigate the influence of the SSGST on real estate 
market prices in Taiwan, we adopted the hedonic pricing model, which can be used 
to determine the effects of houses’ intrinsic characteristics on their prices, and used 
merged administrative data. The results demonstrate that the special ad valorem 
tax was effective in reducing housing prices in short-term transactions, with larger 
declines observed at higher tax rates. Furthermore, its influence gradually extended 
to the broader housing market. However, housing prices in municipalities under the 
control of the central government were less sensitive to the SSGST policy.
Keywords  Hedonic pricing model · Specifically Selected Goods and Services Tax · 
Real estate transaction tax · Price bubble · Spillover effect
JEL Classification  H2 · H3
 *	 Yiwen Yang 
	
ywyang@ntnu.edu.tw
1	
Department of Civic Education and Leadership, College of Education, National Taiwan Normal 
University, Taipei City, Taiwan


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The Japanese Economic Review
Table 1   (continued)
Variable
Definition
Obs
Mean
Std. Dev Min
Max
 Loan-to-value (LTV)
The loan to value at the time of the housing transaction
416,263
69.598
0.438
68.73
70.17
 Consumer Price Index (CPI) The consumer price index at the time of the housing transaction
416,263
98.169
0.837
95.09
99.79
 Quarter
The quarter of the year in which the housing unit was transacted
416,263
2.664
1.122
1
4
 Days_730
A binary variable equal to 1 if the transaction is classified as short term, and 0 otherwise
30,659
0.919
0.273
0
1
Spillover effect model
 N_tran_1 month
The total number of short-term housing transactions measured over a one-month window
28,168
1022.121 297.778
1
1,491
 N_tran_2 months
The total number of short-term housing transactions measured over a two-month window
28,167
2016.885 568.320
2
2,910
 N_tran_3 months
The total number of short-term housing transactions measured over a three-month 
window
28,166
2984.587 826.509
4
4,067
 Tax proportion
The proportion of monthly short-term housing transactions that were subject to the 
SSGST
40
0.141
0.214
0
1
 LR_D_N_tran
The month-over-month change in the number of long-term housing transactions
28
0.214
81.591
-306
130
 N_tran
The number of short-term housing transactions within a given month
40
704.200
479.188
1
1,491
Note: Only observations included in the regression hereinafter are counted


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The Japanese Economic Review	
between the SSGST dummy and the effective tax rate (i.e., tax dummy × effective tax 
rate), as shown in Eq. (6). The individual terms, the tax dummy and the effective tax 
rate, are excluded from the model due to their high correlation with the interaction 
term. This specification allows us to examine whether higher tax burdens are associ-
ated with more pronounced reductions in housing prices.
To control for relevant covariates, in addition to housing characteristics such as 
locational and structural attributes, we also incorporate macroeconomic and macro-
prudential indicators, including LTV, CPI, GDP growth, and the unemployment rate, 
into the regression. To account for seasonality, we follow Osland (2013) and include 
quarterly dummy variables. Temporal and regional heterogeneity are addressed by 
including year fixed effects and county fixed effects (with “county” broadly refer-
ring to both cities and counties), respectively. The log-linear specification enables 
straightforward interpretation of the estimated coefficients as approximate percent-
age changes in housing prices. The hedonic pricing models are specified as follows.
In both Eqs. (5) and (6), Pit is the price of house i at the time (day) t of trans-
action. The vector Z = Z(z1, z2, ⋯, zj) denotes the housing characteristics, and 
G = G(g1, g2, ⋯, gk) represents government macroprudential policies and macro-
economic variables. q captures quarter dummies, while 휃y and 훿r are year and county 
fixed effects, respectively. The error term is denoted by 휀it . Additionally, we esti-
mate an alternative specification in which separate year and county fixed effects are 
replaced with county-by-year interaction dummies. This allows us to account for 
county-specific characteristics that vary over time, capturing unobserved time-var-
ying heterogeneity across counties. We replace, rather than add to, the original fixed 
effects to avoid multicollinearity and ensure that all county-level temporal variation 
is properly absorbed.
Osland (2013) demonstrated that unobserved attributes play a critical role in 
hedonic house price models. Because houses are extremely heterogeneous, includ-
ing all relevant attributes in such models would be impossible. To address this, 
Osland (2013) proposed panel data models as a means of removing the influence of 
unobserved housing attributes on housing prices. Although the merged data set com-
prises panel data, it is unbalanced. The proportion of houses that were transacted 
only once (93%) is high.12 To compromise on a few aforementioned data deficien-
cies and more precisely determine the influence of the SSGST on housing prices, 
we divide our data set into two categories, that is, houses transacted only once and 
houses transacted more than once, and employ different econometric models. It is 
(5)
ln(Pit
) = a + b ⋅tax dummyit +
∑
jcjzjit +
∑
kdkgkit +
∑
sesqsi + 휃y + 훿r + 휀it
(6)
ln(Pit
) = a + b ⋅(tax dummy × effective tax rate)it +
∑
jcjzjit +
∑
kdkgkit
+
∑
sesqsi + 휃y + 훿r + 휀it
12  The number of houses transacted only once is 386,978. The total number of transacted houses is 
416,263. Therefore, the proportion of houses transacted only once is 386,978/416,263 = 0.9296.


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The Japanese Economic Review
Table 2   Effects of the SSGST on Housing Prices -Transacted Only Once
Dependent variable: ln (price)
OLS: tax
OLS: tax dummy*effective tax rate
(1)
(2)
(3)
(4)
Tax
– 0.103***
– 0.108***
(0.033)
(0.033)
Tax dummy*effective tax rate
– 1.000***
– 1.039***
(0.269)
(0.270)
Municipality
0.236***
0.184**
0.236***
0.184**
(0.010)
(0.089)
(0.010)
(0.089)
Tax dummy*municipality
0.0726
0.0816*
0.0870**
0.0961**
(0.045)
(0.045)
(0.042)
(0.042)
ln (house area)
0.904***
0.905***
0.904***
0.905***
(0.003)
(0.003)
(0.003)
(0.003)
Hall
0.0798***
0.0800***
0.0798***
0.0800***
(0.002)
(0.002)
(0.002)
(0.002)
wall
– 0.210***
– 0.210***
– 0.210***
– 0.211***
(0.007)
(0.007)
(0.007)
(0.007)
Age
– 0.00631***
– 0.00630***
– 0.00631***
– 0.00630***
(0.000)
(0.000)
(0.000)
(0.000)
Residential
– 0.156***
– 0.156***
– 0.156***
– 0.156***
(0.002)
(0.002)
(0.002)
(0.002)
Steel reinforced concrete
0.0978***
0.0967***
0.0978***
0.0967***
(0.012)
(0.012)
(0.012)
(0.012)
Apartment
– 0.209***
– 0.209***
– 0.209***
– 0.209***
(0.003)
(0.003)
(0.003)
(0.003)
Econ growth
0.0201***
0.0196***
0.0201***
0.0196***
(0.003)
(0.003)
(0.003)
(0.003)
CPI
– 0.00382
– 0.00348
– 0.00382
– 0.00347
(0.003)
(0.003)
(0.003)
(0.003)
Loan-to-value (LTV)
0.00733*
0.00807*
0.00733*
0.00807*
(0.004)
(0.004)
(0.004)
(0.004)
Unemployment rate
0.0219
0.0227
0.0218
0.0226
(0.022)
(0.022)
(0.022)
(0.022)
Quarter 2
0.0206***
0.0200***
0.0206***
0.0200***
(0.007)
(0.007)
(0.007)
(0.007)
Quarter 3
0.0148***
0.0143**
0.0148***
0.0143**
(0.006)
(0.006)
(0.006)
(0.006)
Quarter 4
0.0475***
0.0468***
0.0475***
0.0468***
(0.006)
(0.006)
(0.006)
(0.006)
Constant
10.63***
10.65***
10.63***
10.65***
(0.429)
(0.430)
(0.429)
(0.430)
County fixed effects
Yes
No
Yes
No
Year fixed effects
Yes
No
Yes
No
County-year paired fixed effects
No
Yes
No
Yes
N
386,978
386,978
386,978
386,978
Adj. R-squared
0.600
0.600
0.600
0.600


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The Japanese Economic Review	
that the housing prices of municipalities under the control of a central govern-
ment are 18.4% ~ 23.6% higher than those of nonmunicipalities. The coefficients 
on the interaction term between the SSGST tax dummy and the municipality indi-
cator (tax dummy × municipality) are positive across all specifications, ranging 
from 0.0726 to 0.0961 in Models (1) through (4). While the estimate in Model 
(1) is not statistically significant, the interaction terms in Models (2) through (4) 
are statistically significant at the 10% level. These results consistently suggest 
that the price-reducing effect of the SSGST is weaker in municipalities governed 
by the central government, indicating that housing prices in these areas are less 
responsive to the policy. This observed heterogeneity motivates further investi-
gation. In Sect. 6.2, we address this by estimating separate models for munici-
palities and nonmunicipalities to more clearly assess regional variation in respon-
siveness to the SSGST.
For the variables related to the structural attributes of houses, we analyze the 
total areas and the number of halls. The coefficients are all positive and signifi-
cant at the 1% level in all models, indicating that housing price increases with 
the square footage and number of halls in a house. Furthermore, the coefficients 
for wall and age are negative and significant at the 1% level in all models. This 
indicates that people generally dislike partition walls. Compared with those with-
out, houses with partition walls have lower prices. One possible reason for this 
is that people frequently renovate houses they have bought, and partition walls 
may force buyers to pay an additional cost to remove the walls. The estimated 
results for the age of houses indicate that housing prices decrease as the age of 
the houses increases. Furthermore, residential houses have lower prices compared 
with houses used for other purposes. Moreover, the results indicate that apartment-
type housing units are priced significantly lower than other building types. In con-
trast, the presence of reinforced concrete construction is positively associated with 
housing prices, highlighting the importance of building type and exterior quality 
in price determination.
Regarding macroprudential indicators, both economic growth and the LTV are 
positively and statistically significantly associated with housing prices, while the 
coefficients on the CPI and the unemployment rate are not statistically significant. 
Seasonal variation is also observed, with housing prices significantly higher in the 
second, third, and fourth quarters compared to the first quarter.
6.1.2  Houses transacted more than once
In this section, we begin by focusing on short-term transactions to examine the 
impact of the SSGST on housing prices. We then broaden the analysis to include all 
housing units that were transacted more than once, allowing us to assess the overall 
Table 2   (continued)
Note: 1. Standard errors in parentheses; 2. * p < 0.10, ** p < 0.05, *** p < 0.01; 3. Due to high collin-
earity between the tax dummy variable and its interaction with the effective tax rate, the tax dummy is 
excluded from Models (3) and (4) to mitigate multicollinearity concerns


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The Japanese Economic Review
Table 3   Effects of the SSGST on Housing Prices- Transacted More Than Once
Short-term transaction
Whole transaction
Tax dummy
Tax dummy*effective tax rate
Tax dummy
Tax dummy*effective tax rate
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Dependent variable: ln (price)
Fixed
Effect
Fixed Effect
Fixed
Effect
Fixed Effect
Fixed Effect
Fixed
Effect
Fixed Effect
Fixed Effect
Tax
– 0.293***
– 0.294***
– 0.261***
– 0.267***
(0.068)
(0.071)
(0.062)
(0.066)
Tax dummy*effective tax rate
– 1.989***
– 1.940***
– 1.740***
– 1.735***
(0.588)
(0.608)
(0.523)
(0.560)
Municipality
 .
 .
 .
 .
 .
. 
 .
 .
Tax dummy*municipality
0.146*
0.147*
0.0862
0.0801
0.117*
0.119
0.0612
0.0560
(0.078)
(0.081)
(0.081)
(0.083)
(0.071)
(0.076)
(0.072)
(0.078)
Days 730
0.232***
0.206***
0.232***
0.206***
(0.033)
(0.034)
(0.033)
(0.034)
ln (house area)
 Hall
– 0.00950
– 0.00931
– 0.00830
– 0.00824
– 0.00517
– 0.00443
– 0.00408
– 0.00347
(0.012)
(0.012)
(0.012)
(0.012)
(0.012)
(0.012)
(0.012)
(0.012)
 Wall
0.146***
0.120***
0.146***
0.121***
0.127***
0.101**
0.128***
0.102**
(0.043)
(0.044)
(0.043)
(0.044)
(0.041)
(0.041)
(0.041)
(0.041)
 Age
– 0.00353
0.000662
– 0.00273
0.00119
– 0.00685*
– 0.00368
– 0.00624*
– 0.00332
(0.007)
(0.006)
(0.006)
(0.006)
(0.004)
(0.004)
(0.003)
(0.003)
 Residential
0.227
0.277**
0.218*
0.266***
0.229**
0.264***
0.243**
0.265***
(0.144)
(0.114)
(0.125)
(0.100)
(0.105)
(0.099)
(0.104)
(0.096)


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The Japanese Economic Review	
Table 3   (continued)
Short-term transaction
Whole transaction
Tax dummy
Tax dummy*effective tax rate
Tax dummy
Tax dummy*effective tax rate
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Steel reinforced concrete
 Apartment
0.0277
0.0361
0.0292
0.0374
0.0459
0.0488
0.0479
0.0513
(0.058)
(0.058)
(0.059)
(0.059)
(0.056)
(0.058)
(0.056)
(0.058)
 Econ growth
0.0219*
0.0228*
0.0214*
0.0222*
0.0244**
0.0237**
0.0239**
0.0230**
(0.012)
(0.012)
(0.012)
(0.012)
(0.012)
(0.012)
(0.012)
(0.012)
 CPI
0.00230
0.00153
0.00172
0.00105
0.00199
0.00113
0.00120
0.000158
(0.012)
(0.012)
(0.012)
(0.012)
(0.011)
(0.011)
(0.012)
(0.011)
 Loan-to-value (LTV)
0.0276
0.0271
0.0301
0.0294
0.0219
0.0188
0.0242
0.0209
(0.019)
(0.019)
(0.019)
(0.019)
(0.019)
(0.019)
(0.019)
(0.019)
 Unemployment
– 0.195*
– 0.171
– 0.189*
– 0.164
– 0.175
– 0.134
– 0.170
– 0.127
(0.110)
(0.111)
(0.112)
(0.113)
(0.107)
(0.108)
(0.108)
(0.110)
 Quarter 2
– 0.0156
– 0.0126
– 0.0156
– 0.0124
– 0.0106
– 0.00312
– 0.0104
– 0.00231
(0.031)
(0.031)
(0.031)
(0.031)
(0.030)
(0.030)
(0.030)
(0.030)
 Quarter 3
0.101***
0.0976***
0.100***
0.0967***
0.104***
0.102***
0.103***
0.102***
(0.025)
(0.025)
(0.025)
(0.025)
(0.024)
(0.024)
(0.025)
(0.024)
Quarter 4
0.131***
0.131***
0.130***
0.131***
0.133***
0.139***
0.133***
0.140***
(0.027)
(0.027)
(0.028)
(0.027)
(0.026)
(0.026)
(0.027)
(0.026)
 Constant
13.48***
13.96***
13.32***
13.81***
13.66***
14.33***
13.53***
14.24***
(1.927)
(1.901)
(1.936)
(1.911)
(1.903)
(1.876)
(1.914)
(1.888)
County fixed effects
Yes
No
Yes
No
Yes
No
Yes
No
Year fixed effects
Yes
No
Yes
No
Yes
No
Yes
No
County-year paired fixed effects
No
Yes
No
Yes
No
Yes
No
Yes


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The Japanese Economic Review
Table 3   (continued)
Short-term transaction
Whole transaction
Tax dummy
Tax dummy*effective tax rate
Tax dummy
Tax dummy*effective tax rate
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
N
26,794
26,794
26,794
26,794
29,285
29,285
29,285
29,285
Adj. R-squared
0.402
0.444
0.394
0.437
0.413
0.453
0.406
0.446
Note: 1. Standard errors in parentheses; 2. * p < 0.10, ** p < 0.05, *** p < 0.01; 3. Due to high collinearity between the tax dummy variable and its interaction with the 
effective tax rate, the tax dummy is excluded from Models (3), (4), (7) and (8) to mitigate multicollinearity concerns


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The Japanese Economic Review
Table 4   Effects of the SSGST on Housing Prices in Municipalities and Nonmunicipalities
Municipality
Non-municipality
Short-term transaction
Tax dummy
Tax dummy*effective tax rate
Tax dummy
Tax dummy*effective 
tax rate
Tax
– 0.153***
– 0.152***
– 0.263***
– 0.266***
(0.039)
(0.039)
(0.065)
(0.068)
Tax dummy*effective tax rate
– 1.131***
– 1.121***
– 2.069***
– 2.096***
(0.306)
(0.311)
(0.593)
(0.632)
Housing Characterisitcs
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Macro
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Quarter dummies
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Year fixed effects
Yes
No
Yes
No
Yes
No
Yes
No
County fixed effects
Yes
No
Yes
No
Yes
No
Yes
No
County-year paired fixed effects
No
Yes
No
Yes
No
Yes
No
Yes
N
20,694
20,694
20,694
20,694
6100
6100
6100
6100
Adjusted R squared
0.381
0.406
0.377
0.401
0.506
0.562
0.501
0.556
Whole transaction
Tax dummy
Tax dummy*effective tax rate
Tax dummy
Tax dummy*effective 
tax rate
Tax
– 0.148***
– 0.152***
– 0.240***
– 0.250***
(0.037)
(0.037)
(0.062)
(0.065)
Tax dummy*effective tax rate
– 1.083***
– 1.113***
– 1.882***
– 1.984***
(0.290)
(0.295)
(0.555)
(0.593)
Housing Characterisitcs
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes


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The Japanese Economic Review	
Table 4   (continued)
Whole transaction
Tax dummy
Tax dummy*effective tax rate
Tax dummy
Tax dummy*effective 
tax rate
Macro
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Quarter dummies
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Year fixed effects
Yes
No
Yes
No
Yes
No
Yes
No
County fixed effects
Yes
No
Yes
No
Yes
No
Yes
No
County-year paired fixed effects
No
Yes
No
Yes
No
Yes
No
Yes
N
22,502
22,502
22,502
22,502
6783
6783
6783
6783
Adjusted R squared
0.393
0.416
0.388
0.411
0.508
0.562
0.503
0.558
Note: Standard errors in parentheses; * p < 0.10, ** p < 0.05, *** p < 0.01


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The Japanese Economic Review
Table 5   Propensity Score Matching Results for Housing Units Transacted Only Once and More Than 
Once Under Different Tax Specifications
Notes: 1. This table reports average treatment effects on the treated (ATT) estimated via propensity score 
matching using 1-to-1 nearest neighbor matching with a caliper of 0.05. The treated group includes 
housing units subject to each respective SSGST tax rate. Covariate balance diagnostics (available upon 
request) confirm improved balance after matching. 2. *, **, and *** indicate significance at the 10%, 5%, 
and 1% levels, respectively
Transacted only once
Tax Variable Covariates Included
Treated Mean Control Mean ATT 
(Treated – 
Control)
S.E
T-stat
Tax
County and year dum-
mies
15.187
15.263
– 0.076
0.042 – 1.81*
Tax
County-year interaction 
dummies
15.187
15.260
– 0.072
0.042 – 1.7*
Tax 10%
County and year dum-
mies
15.183
15.167
0.015
0.052 – 0.29
Tax 10%
County-year interaction 
dummies
15.183
15.181
0.001
0.052 0.03
Tax 15%
County and year dum-
mies
15.195
15.346
– 0.151
0.074 – 2.04**
Tax 15%
County-year interaction 
dummies
15.195
15.360
– 0.165
0.074 – 2.22**
Transacted more than once: Short-term transaction
 Tax
County and year dum-
mies
15.195
15.360
– 0.165
0.074 – 2.22**
 Tax
County-year interaction 
dummies
14.943
15.108
– 0.165
0.053 – 3.1***
 Tax 10%
County and year dum-
mies
14.997
15.172
– 0.175
0.064 – 2.71***
 Tax 10%
County-year interaction 
dummies
14.997
15.149
– 0.152
0.064 – 2.37**
 Tax 15%
County and year dum-
mies
14.884
15.269
– 0.384
0.080 – 4.82***
 Tax 15%
County-year interaction 
dummies
14.884
15.182
– 0.298
0.075 – 3.97***
Transacted more than once: Whole transaction
 Tax
County and year dum-
mies
14.943
15.150
– 0.207
0.052 – 3.98***
 Tax
County-year interaction 
dummies
14.943
15.223
– 0.280
0.052 – 5.41***
 Tax 10%
County and year dum-
mies
14.997
15.185
– 0.188
0.063 – 2.97***
 Tax 10%
County-year interaction 
dummies
14.999
15.208
– 0.209
0.066 – 3.18***
 Tax 15%
County and year dum-
mies
14.884
15.189
– 0.304
0.077 – 3.96***
 Tax 15%
County-year interaction 
dummies
14.884
15.157
– 0.273
0.079 – 3.46***


===== PAGE 33 (score 30, numeric-paren 15, table-words 2, var-words 2) =====

The Japanese Economic Review	
Table 6   Propensity Score Matching Results Separately for Municipalities and Nonmunicipalities
Tax Variable Covariates Included
Treated Mean Control Mean ATT 
(Treated–
Control)
S.E.
T-stat
Municipalities
 Short-term transaction
  tax
County and year dum-
mies
15.098
15.278
– 0.180
0.065 – 2.75***
  tax
County-year interaction 
dummies
15.098
15.228
– 0.130
0.063 – 2.05**
  tax 10%
County and year dum-
mies
15.108
15.295
– 0.188
0.082 – 2.3**
  tax 10%
County-year interaction 
dummies
15.108
15.278
– 0.170
0.083 – 2.06**
  tax 15%
County and year dum-
mies
15.087
15.264
– 0.178
0.102 – 1.74*
  tax 15%
County-year interaction 
dummies
15.098
15.237
– 0.139
0.105 – 1.32
 Whole transaction
  Tax
County and year dum-
mies
15.098
15.219
– 0.121
0.069 – 1.75*
  Tax
County-year interaction 
dummies
15.098
15.285
– 0.187
0.063 – 2.97***
  Tax 10%
County and year dum-
mies
15.108
15.258
– 0.150
0.096 – 1.57
  Tax 10%
County-year interaction 
dummies
15.108
15.228
– 0.120
0.078 – 1.53
  Tax 15%
County and year dum-
mies
15.087
15.184
– 0.098
0.104 – 0.94
  Tax 15%
County-year interaction 
dummies
15.098
15.312
-0.214
0.101 -2.13**
Nonmunicipalities
 Short-term transaction
  Tax
County and year dum-
mies
14.670
14.961
– 0.290
0.079 – 3.69***
  Tax
County-year interaction 
dummies
14.670
14.972
– 0.302
0.074 – 4.06***
  Tax 10%
County and year dum-
mies
14.783
15.059
– 0.277
0.094 – 2.94***
  Tax 10%
County-year interaction 
dummies
14.783
15.076
– 0.293
0.094 – 3.11***
  Tax 15%
County and year dum-
mies
14.563
14.937
– 0.374
0.122 – 3.08***
  Tax 15%
County-year interaction 
dummies
14.563
14.880
– 0.316
0.116 – 2.73***
 Whole transaction
  Tax
County and year dum-
mies
14.670
15.059
– 0.389
0.077 – 5.03***


===== PAGE 34 (score 19, numeric-paren 5, table-words 4, var-words 4) =====

	
The Japanese Economic Review
The coefficients on the interaction between the tax dummy and the municipality 
indicator are positive and statistically significant at the 10% level in specifications 
that include the tax dummy, except in the whole-market models with county-year 
paired fixed effects. In contrast, the interaction terms are not statistically significant 
in specifications that use the interaction between the tax dummy and the effective 
tax rate. These findings suggest that the impact of the SSGST on housing prices 
may differ between municipalities governed by the central government and nonmu-
nicipalities. Accordingly, we further compare the effects of the SSGST on housing 
prices between these two groups.
6.2  Heterogeneity between municipalities under the control of a central 
government and nonmunicipalities
To explore whether the impact of the SSGST differs across administrative regions, 
we estimate panel data models separately for municipalities governed by the central 
government and for nonmunicipalities. Based on the results of the Hausman test, we 
adopt fixed effects specifications in both the short-term and full-sample transaction 
models for houses transacted more than once. The results are presented in Table 4.
In the short-term transaction models, the implementation of the SSGST is associ-
ated with a housing price decrease of approximately 15.2%–15.3% in municipalities 
under the control of the central government and 26.3%–26.6% in nonmunicipalities. 
In the whole transaction models, which include both short- and long-term transac-
tions, the SSGST corresponds to a price decline of approximately 14.8%–15.2% in 
Notes: 1. This table reports average treatment effects on the treated (ATT) estimated via propensity score 
matching using 1-to-1 nearest neighbor matching with a caliper of 0.05. The treated group includes 
housing units subject to each respective SSGST tax rate. Covariate balance diagnostics (available upon 
request) confirm improved balance after matching. 2. *, **, and *** indicate significance at the 10%, 5%, 
and 1% levels, respectively
Table 6   (continued)
Tax Variable Covariates Included
Treated Mean Control Mean ATT 
(Treated–
Control)
S.E.
T-stat
  Tax
County-year interaction 
dummies
14.670
15.051
– 0.381
0.077 – 4.97***
  Tax 10%
County and year dum-
mies
14.783
14.996
– 0.214
0.098 – 2.18**
  Tax 10%
County-year interaction 
dummies
14.783
15.042
– 0.259
0.100 – 2.61***
  Tax 15%
County and year dum-
mies
14.563
14.891
– 0.328
0.121 – 2.71***
  Tax 15%
County-year interaction 
dummies
14.563
14.911
– 0.347
0.117 – 2.96***


===== PAGE 35 (score 59, numeric-paren 46, table-words 2, var-words 3) =====

The Japanese Economic Review	
Table 7   Effect of the Number of Transactions on Housing Prices
Note: Standard errors in parentheses; * p < 0.10, ** p < 0.05, *** p < 0.01
Holding period
Short-term transactions (within 2 years, including units transacted only once and more than once)
Tax dummy
Tax dummy*effective 
tax rate
Tax dummy
Tax dummy*effective tax rate
Tax dummy
Tax dummy*effective tax rate
FE
FE
FE
FE
FE
FE
FE
FE
FE
FE
FE
FE
N_tran_1 month
0.0000509
0.0000502
0.0000533*
0.0000541*
(0.000)
(0.000)
(0.000)
(0.000)
N_tran_2 months
0.0000535**
0.0000497**
0.0000553**
0.0000521**
(0.000)
(0.000)
(0.000)
(0.000)
N_tran_3 months
0.0000491**
0.0000484***
0.0000512***
0.0000505***
(0.000)
(0.000)
(0.000)
(0.000)
Tax
-0.291***
-0.292***
-0.291***
-0.292***
-0.290***
-0.292***
(0.068)
(0.071)
(0.068)
(0.071)
(0.068)
(0.070)
tax dummy*effective 
tax rate
-1.975***
-1.923***
-1.994***
-1.945***
-1.992***
-1.944***
(0.585)
(0.604)
(0.584)
(0.605)
(0.582)
(0.602)
Housing Character-
isitcs
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Macro
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Quarter dummies
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Year fixed effects
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
County fixed effects Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
County-year paired 
fixed effects
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
No
Yes
N
28,168
28,168
28,168
28,168
28,167
28,167
28,167
28,167
28,166
28,166
28,166
28,166
Adj.R squared
0.403
0.445
0.395
0.438
0.404
0.447
0.397
0.439
0.406
0.448
0.399
0.441


===== PAGE 36 (score 24, numeric-paren 7, table-words 5, var-words 5) =====

	
The Japanese Economic Review
municipalities and 24.0%–25.0% in nonmunicipalities. While the policy exerts a 
price-depressing effect in both regions, the estimated magnitudes are consistently 
larger in nonmunicipalities. These findings suggest that housing prices in munici-
palities under the control of the central government are less responsive to the tax, 
potentially due to stronger housing demand driven by urbanization.
When incorporating the interaction between the tax dummy and the effective tax 
rate, the coefficients on the interaction term are consistently negative and statisti-
cally significant across all specifications. In the short-term transaction models, the 
coefficients range from –1.121 to –1.131 for municipalities and –2.069 to –2.096 
for nonmunicipalities. In the whole transaction models, the coefficients range from 
–1.083 to –1.113 for municipalities and –1.882 to –1.984 for nonmunicipalities. 
These results provide further evidence that higher tax rates are associated with 
greater reductions in housing prices, with the effect being more pronounced in non-
municipal areas.
6.3  Robustness check using propensity score matching
To further assess the robustness of our findings, we employ PSM to estimate the 
average treatment effect on the treated (ATT), comparing treated transactions to 
observationally similar controls. Specifically, we estimate ATT using one-to-one 
nearest neighbor matching with a caliper of 0.05. The treated group consists of hous-
ing units subject to one of the SSGST tax treatments, represented by a general tax 
dummy, a 10% tax rate, or a 15% tax rate. Propensity scores are derived from logis-
tic regressions that include a comprehensive set of covariates, such as housing char-
acteristics, macroeconomic indicators, quarterly dummies, and either county and 
year dummies or county-year interaction dummies (Caliendo & Kopeinig, 2005).
Table 8   Effect of the SSGST on Number of Transactions
Note:1. Standard errors in parentheses; 2.* p < 0.10, ** p < 0.05, *** p < 0.01; 3. We observed that the 
tax proportion variable takes on extreme values of 1 or 0 in five instances. These values arise from a 
limited number of transactions that could be classified as short-term or long-term during the initial and 
final months of the dataset. To account for these extreme cases, we exclude the five observations and 
re-estimate the models in Table 8. The coefficients across all four specifications remain negative and 
statistically significant with 35 observations. Due to space limitations, the results are not reported but are 
available upon request
N_tran
N_tran
N_tran
N_tran
OLS
OLS
OLS
OLS
Tax proportion
− 1075.0***
− 1138.1***
− 1059.9***
− 159.0
(210.498)
(304.587)
(307.125)
(146.022)
Macro
No
No
Yes
Yes
Quarter dummies
No
Yes
Yes
Yes
Year dummies
No
No
No
Yes
N
40
40
40
40
adj. R-sq
0.211
0.249
0.605
0.875


===== PAGE 37 (score 21, numeric-paren 2, table-words 7, var-words 5) =====

The Japanese Economic Review	
Table 9   Test of Transfer 
of Holding Periods from 
Short-Term to Long-Term 
Transactions
Note: Standard errors in parentheses; * p < 0.10
LR_ D _N_tran
OLS
L.N_tran
− 0.164*
(0.081)
Macro
Yes
Quarter dummies
Yes
Year dummies
Yes
N
28
adj. R-sq
0.433
Table 5 presents the ATT estimates for housing units transacted only once and 
for those transacted more than once, while Table 6 displays the results separately for 
municipalities and nonmunicipalities. Across both tables, the ATT estimates, meas-
ured as the differences between treated and control group means, associated with 
the general SSGST tax dummy are consistently negative and statistically significant 
at the 10% level. For example, in the specification for housing units transacted only 
once using county and year dummies, the difference is − 0.076, significant at the 
10% level. These results consistently indicate that the implementation of the SSGST 
led to a reduction in housing prices.
When comparing the ATT estimates for the 10% and 15% tax rates, the results 
suggest that the 15% tax generally resulted in larger price reductions than the 10% 
tax. Although some of the estimates, particularly for housing units transacted only 
once and for whole-market transactions in municipalities, are not statistically sig-
nificant, the overall pattern still points to a stronger effect associated with the higher 
tax rate. In addition, the ATT estimates are consistently larger in magnitude in non-
municipalities than in municipalities. For example, in the case of short-term trans-
actions, the ATT estimate for the general tax dummy using county-year interaction 
dummies is − 0.302 in nonmunicipalities and − 0.130 in municipalities, both statisti-
cally significant. This suggests that housing prices in nonmunicipal areas are more 
sensitive to the SSGST.
Overall, the propensity score matching results reinforce the main findings. They 
support the robustness of the conclusion that the SSGST has a price-depressing 
effect on housing markets, with greater reductions observed under higher tax rates 
and in nonmunicipal regions.
6.4  Spillover effect generated by speculation suppression
We further investigate the mechanism underlying the effectiveness of the SSGST. 
We investigate potential price spillover effect from the tax by incorporating aspects 
of the short-term transactions included in Table 2 into the data presented in Table 3. 
As a result, the number of short-term transaction observations increases from 26,794 
to 28,168, while that of long-term transactions remains at 2,491. We use fixed effects 
models. The results regarding the association between aggregate trade volumes and