Stockholm Papers in Economic History
Department of Economic History, Stockholm University
Speculative bubbles in the Stockholm housing market 1875-1935?
Abstract: The main purpose of this paper has been to establish
whether housing and rent prices share a common trend in the long run. And
thus, to determine whether there were speculative bubbles in the Stockholm
housing market during the period 1875-1930. This period offered an
excellent opportunity for such an investigation due to limited regulation
in the housing market. Finally, a newly generated data on Stockholm housing
prices from 1875 and data on Stockholm rent prices have given us rare
insight into the Stockholm housing market. After applying the statistical
procedure of testing for cointegration, we have concluded that Stockholm
housing and rent prices share a common trend, i.e. that they return to a
long run equilibrium after experiencing an exogenous shock. More
specifically, the results indicate a 22% movement back towards equilibrium
following a shock to the model, one period later, i.e. one year later.
Therefore, we conclude that during the period 1875-1930 there was no
indication of a speculative bubble in the Stockholm housing market.
Keywords: housing market; cointegration; economic history; (follow links to similar papers)
JEL-Codes: N93; N94; (follow links to similar papers)
27 pages, March 5, 2015
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