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Residential Mobility and the Housing Market in a Two‐sector Neoclassical Growth Model
Author(s) -
Hardman Anna M.,
Ioannides Yannis M.
Publication year - 1999
Publication title -
scandinavian journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.725
H-Index - 64
eISSN - 1467-9442
pISSN - 0347-0520
DOI - 10.1111/1467-9442.00159
Subject(s) - economics , consumption (sociology) , growth model , capital (architecture) , general equilibrium theory , welfare , labour economics , sector model , microeconomics , market economy , social science , ecology , sociology , biology , history , agriculture , archaeology
The impact of residential mobility and competitive housing markets on long run growth is examined using a two‐sector general equilibrium overlapping‐generations model in continuous time. There is an infinity of agents with finite lives who adjust their housing consumption by moving, which is costly. We explore the model's steady‐state properties, first with a free housing market, then under rent control when the market clears through restrictions on the frequency of moves. Rent controls do not just reduce welfare; they may increase the steady‐state capital‐labor ratio.