The $69 billion mortgage interest deduction (MID) is often viewed as an element of the tax code that promotes middle … filers claiming to make less than $50,000, only 9.8 percent of these returns used the mortgage interest deduction. In order …

The $69 billion mortgage interest deduction (MID) is often viewed as an element of the tax code that promotes middle … filers claiming to make less than $50,000, only 9.8 percent of these returns used the mortgage interest deduction. In order …

This paper develops a general equilibrium model featuring tax deductible mortgage interest. There are two main results …: (i) a higher mortgage interest deduction leads to higher house prices, more levered households, and a higher rate of … mortgage default; (ii) when mortgage risk is high the presence of mortgage interest deduction leads to more volatile responses …