The effects of rent control in Latin America: A century of regulations in Argentina

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Facultad de Ciencias Económicas y Empresariales. Instituto Complutense de Análisis Económico (ICAE)
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Following World War I, rent control became a standard policy response to the housing shortage and the resulting rent increases. Typically, economists blame it for creating inefficiencies in the housing market and beyond. We investigate whether rental market regulations (including rent control, protection of tenants from eviction, and housing rationing) had any effects in a middle-income Latin American economy, such as Argentina. To answer this question, we take advantage of a wide range of housing market indicators and restrictive rental regulation indices covering almost one century. Using a standard OLS model and MARS, a non-linear estimation technique, we find that rental market regulations have exerted a statistically significant negative impact on the growth rates of the real housing rents. However, they were only effective for short periods following both World Wars, when regulations were novel and particularly strong.
The authors express their gratitude to Patricia León from the Tornquist Library at the Central Bank of Argentina for sharing historical data and documents. They also thank Claudia Palacios for her support in gathering the rent laws and decrees. Daniela Gonzalez provided excellent research assistance. Part of this research was carried out when Alejandro D. Jacobo visited the ICAE at Universidad Complutense de Madrid, Spain, in June 2019. A preliminary version of this paper was presented by the authors in a seminar of the IEF at Universidad Nacional de Córdoba, Argentina, in August 2019, and in workshop organized by the Macroeconomic department of DIW Berlin, in October 2019. The authors wish to thank the participants of both meetings for their valuable remarks. The usual disclaimer applies.
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