 Real estate price and heterogeneous investment behavior in ChinaRen Wang, Jie Hou and Xiaobei He Economic Modelling, 2017, vol. 60, issue C, 271-280 Abstract: We study the dynamic link between real estate prices and firms' investment behaviors in China using a new Keynesian dynamic stochastic general equilibrium model. The model features heterogeneous production sectors in which private firms face discriminatory borrowing constraints while state-owned firms are not. Fitted to China's quarterly data from 2005Q3 to 2014Q4, the quantitative general equilibrium model enables us to identify the driving forces behind and the macroeconomic variables interacting with land price. It confirms the existence of the “collateral channel” in the private sector without bearing the potential endogeneity problems in empirical studies. More importantly, we identify a “crowding out” channel between private and state-owned firms caused by discriminatory financial constraints. The “crowding out” channel implies a negative relationship between real estate prices and the investment of state-owned firms, which has been documented in empirical research but short of explanation so far. Keywords: Real estate price; Investment; Private firm; State-owned firm (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:60:y:2017:i:c:p:271-280 DOI: 10.1016/j.econmod.2016.09.020 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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