Speculative housing markets and rent control: insights from nonlinear economic dynamics

Artikel

We propose a novel housing market model to explore the effectiveness of rent control. Our model reveals that the expectation formation and learning behavior of boundedly rational homebuyers, switching between extrapolative and regressive expectation rules subject to their past forecasting accuracy, may create endogenous housing market dynamics. We show that policymakers may use rent control to reduce the rent level, although such policies may have undesirable effects on the house price and the housing stock. However, we are also able to prove that well-designed rent control may help policymakers to stabilize housing market dynamics, even without creating housing market distortions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Journal of Economic Interaction and Coordination ; ISSN: 1860-7128 ; Volume: 17 ; Year: 2021 ; Issue: 1 ; Pages: 141-163 ; Berlin, Heidelberg: Springer

Classification and Topics

• Classification: Wirtschaft ; Expectations; Speculations ; Asset Pricing; Trading Volume; Bond Interest Rates ; Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
• Subject: Housing market dynamics ; Expectation formation and learning behavior ; Rent control ; Steady state, stability and out-of-equilibrium analysis

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Schmitt, Noemi ; Westerhoff, Frank
• Event: Veröffentlichung
• (who): Springer
• (where): Berlin, Heidelberg
• (when): 2021

Further information

• DOI: doi:10.1007/s11403-020-00312-3
• Last update: 10.03.2025, 11:43 AM CET