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

Authors

Jose G. Montalvo

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2023-28 | September 1, 2023

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.

Article Citation

Monras, Joan, and Jose G. Montalvo. 2023. “The Effect of Second-Generation Rent Controls: New Evidence from Catalonia,” Federal Reserve Bank of San Francisco Working Paper 2023-28. Available at https://doi.org/10.24148/wp2023-28

About the Author
Joan Monras
Joan Monras is a research advisor in the Economic Research Department of the Federal Reserve Bank of San Francisco. Learn more about Joan Monras