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The Effect of Second-Generation Rent Controls: New Evidence from Catalonia

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Abstract

Catalonia enacted a second-generation rental cap policy that affected only some municipalities and, within those, only units with prices above their “reference” price. We show that, as intended, the policy led to a reduction in rental prices, but with price increases at the bottom and price declines at the top of the distribution. The policy also affected supply, with exit at the top which is not compensated by entry at the bottom. We show that a model with quality differences in rental units rationalizes the empirical facts and allows us to compute the welfare consequences of the policy.

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  • Joan Monras & Jose G. Montalvo, 2023. "The Effect of Second-Generation Rent Controls: New Evidence from Catalonia," Working Paper Series 2023-28, Federal Reserve Bank of San Francisco.
    • Handle: RePEc:fip:fedfwp:96942
    DOI: 10.24148/wp2023-28
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    More about this item

    Keywords

    rental markets; rent control; housing supply;
    All these keywords.

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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