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The Q theory and the Swedish housing market –an empirical test

Author

Listed:
  • Berg, Lennart

    (Department of Economics)

  • Berger, Tommy

    (Institute for Housing and Urban Research)

Abstract

We argue that major changes in economic policy have resulted in a more market driven demand for housing investment in Sweden as a result of changes in policy during the end of the 1980s and beginning of the 1990s. The used investment theory is Tobin’s transparent Q theory. Our results indicate, for the last period of the sample (1993-2003 quarterly data) that a high degree of correlation between the Q ratio and the (logarithm of) two different variables for housing investment exist. An error correction regression model, controlling for structural breaks, indicates also a stable long run relationship could be detected for the logarithm of building starts and the Q ratio between 1993-2003 but not between 1981-1992.

Suggested Citation

  • Berg, Lennart & Berger, Tommy, 2005. "The Q theory and the Swedish housing market –an empirical test," Working Paper Series 2005:19, Uppsala University, Department of Economics.
    • Handle: RePEc:hhs:uunewp:2005_019
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    Cited by:

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    2. Hallberg, Daniel, 2006. "Cross-national differences in income poverty among Europe´s 50+," Working Paper Series 2006:14, Uppsala University, Department of Economics.
    3. Fredrik Johansson-Tormod & Anders Klevmarken, 2022. "Explaining the Size and Nature of Response in a Survey on Health Status and Economic Standard," International Journal of Microsimulation, International Microsimulation Association, vol. 15(1), pages 63-77.
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    5. Ågren, Martin, 2006. "Prospect Theory and Higher Moments," Working Paper Series 2006:24, Uppsala University, Department of Economics.
    6. Rainer Schulz & Axel Werwatz, 2008. "House Prices and Replacement Cost: A Micro-Level Analysis," SFB 649 Discussion Papers SFB649DP2008-013, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    7. Verona, Fabio, 2017. "Q, investment, and the financial cycle," Research Discussion Papers 26/2017, Bank of Finland.

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    More about this item

    Keywords

    Tobin's Q; housing investment; error correction model; structural break;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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