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

Joan Monras and García-Montalvo, José

No 18485, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

JEL-codes: D4 R21 R28 R31 (search for similar items in EconPapers)
Date: 2023-09
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