Scandinavian Working Papers in Economics
Working Paper Series,
Uppsala University, Department of Economics
No 2005:19: The Q theory and the Swedish housing market –an empirical test
Lennart Berg () and Tommy Berger ()
Additional contact information
Lennart Berg: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Tommy Berger: Institute for Housing and Urban Research, Postal: Box 785, SE-801 29 Gävle, Sweden
Abstract: We argue that major changes in economic policy have resulted in a more market driven demand for housing investment in Sweden as a result of changes in policy during the end of the 1980s and beginning of the 1990s. The used investment theory is Tobin’s transparent Q theory. Our results indicate, for the last period of the sample (1993-2003 quarterly data) that a high degree of correlation between the Q ratio and the (logarithm of) two different variables for housing investment exist. An error correction regression model, controlling for structural breaks, indicates also a stable long run relationship could be detected for the logarithm of building starts and the Q ratio between 1993-2003 but not between 1981-1992.
Keywords: Tobin's Q; housing investment; error correction model; structural break
16 pages, June 15, 2005
Full text files
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