A Simulation Study of the Interactive Effects of Taxes and Inflation on the Relative Price of Land.

The primary purpose of the paper is to determine the effects of changes in the inflation rate, the capital gains tax rate, and the ordinary income tax rate on the price of land relative to capital under alternative assumptions about the rate of depreciation and lender and borrower elasticities. Most of the partial derivatives cannot be signed, so we resort to a simulation of the comparative static results. We use the simulated comparative statics to investigate the effects of tax rate changes specified in the 1986 Tax Reform Act on land's relative price. [ABSTRACT FROM AUTHOR]