The business cycle implications of land financing in China

Shen Guo, Lezheng Liu and Yan Zhao

Economic Modelling, 2015, vol. 46, issue C, 225-237

Abstract: In the past decade, the Chinese government was increasingly relying on revenues from land sales to finance the public spending. This paper examines the impacts of land financing on business cycle fluctuations in China in an estimated DSGE model. The simulation results indicate that the overall effect of land financing is to increase the business cycle fluctuations by 12.6%. However, the impacts of land financing on business cycle fluctuations depend on shocks hitting the economy. The policy implication of this paper is that cutting the direct linkage between the government expenditure and the land sales could mitigate the business cycle fluctuations.

Keywords: Land financing; Government spending; DSGE model; China (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0264999314005057
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:46:y:2015:i:c:p:225-237

DOI: 10.1016/j.econmod.2014.12.033

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().