Residential Mobility and the Housing Market in a Two-Sector Neoclassical Growth Model.

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. The authors explore the model's steady-state properties, first with a free housing market and 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. Copyright 1999 by The editors of the Scandinavian Journal of Economics.