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2006 OECD Economic Surveys: Denmark 2006

image of OECD Economic Surveys: Denmark 2006

This edition of OECD's periodic survey of the Danish economy finds overall good performance but warns of overheating and a weak outlook.  It examines in more detail raising the labour supply to safeguard welfare, improving educational provision and making incentives more compatible with societal needs, and introducing more flexibility and less subsidy in housing. 

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Housing

Less Subsidy and More Flexibility

This Chapter discusses ways of replacing the costly government intervention in the Danish housing market with more market-based mechanisms thereby achieving policy objectives in a more efficient and targeted way. The Chapter begins by describing the institutional features of the housing sector, followed by an assessment of overall subsidisation of housing through direct public expenditures and indirect tax subsidies. This includes a discussion of ways to free resources on public budgets for other purposes that are more central to maintaining the welfare state in an ageing society. The Chapter then reviews the rent regulation framework for private and social rented housing and discusses how to provide more flexibility. The final part reviews owner-occupied housing, particularly how the zoning regulations and municipal incentives could be improved to allow for a more responsive housing supply. It also reviews innovative developments in mortgage financing.

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