Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 12: The Linear Expenditure System and Demand for Housing under Rent Control

Per Högberg and Anders Klevmarken
Additional contact information
Per Högberg: Research Institute of Industrial Economics (IFN)
Anders Klevmarken: Research Institute of Industrial Economics (IFN)

Abstract: In most applications of complete systems of demand functions to national accounts data it is implicitly assumed that the demand functions are identified. For post-war Sweden this is not an altogether good assumption because due to rent control there was an excess demand for housing. In this paper the linear expenditure system is modified to include a supply function for housing. Supply is simply assumed to be a function of excess demand. The model is estimated by the maxi mum likelihood method and the results are compared to those obtained for the ordinary linear expenditure system.

Keywords: Housing demand; Rent control; Sweden

JEL-codes: R21; R31

24 pages, May 1977

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