Housing prices and carbon emissions: a dynamic panel threshold model of 60 Chinese cities

Shiwei Yu, Xing Hu and Juan Yang

Applied Economics Letters, 2021, vol. 28, issue 3, 170-185

Abstract: In the past two decades, both housing prices and carbon emissions have risen dramatically in China. However, it is unclear whether there is a nexus between them. This study employs a dynamic panel threshold regression model using residents' income levels as the threshold variable to investigate the relationship between housing prices and per capita carbon emissions. By considering 60 Chinese housing price-monitored cities, a threshold effect of income on carbon emissions was identified with a threshold value of 2.448, which divided the full sample into two regimes to further analyse the impacts of housing prices on per capita carbon emissions at each income level. The empirical results show that housing prices have a slight but positive effect on per capita carbon emissions both at two income levels. Specifically, a 10% change in housing prices can lead to a change in the same direction in per capita carbon emissions by 0.7% and 0.2% at lower and higher average income levels, respectively. However, in small cities, limited population may contribute to the negative impact of housing prices on carbon emissions. Furthermore, the results also confirm that the urbanization rate is an important factor of per capita carbon emissions.

Date: 2021
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DOI: 10.1080/13504851.2020.1739612

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