The impact of housing price on non-housing consumption of the Chinese households: A general equilibrium analysis
Qiuyun Wang and
The North American Journal of Economics and Finance, 2019, vol. 49, issue C, 152-164
In recent years, the absolute values of the housing price and the households’ non-housing consumption in China are both on the rise, but many documents studying on the impact that the ever-changing housing price exerts on Chinese households’ consumption consider that the rise of housing price represses the households’ consumption expenditure. This paper constructs a general equilibrium model to explain the impact of housing price changes on the consumption expenditure of urban residents. The result shows that the rise in housing prices has both crowding-out and wealth effects for households’ consumption. Further, the empirical test shows that during the period of “2006–2010”, for every 1% rise in housing prices, the total retail sales of consumer goods falls by 0.332%; and to the contrast, during the “2011–2015” period, for every 1% rise in housing price, the total retail sales of consumer goods are increased by 0.207%. The above results indicate that along with the increase in housing holding areas, the impact of housing price changes on households’ consumption has gradually shifted from the crowding-out effect to the wealth effect. We also find out that external speculative demand makes the impact of housing price rise on local residents’ consumption manifested as the crowding-out effect. However, in the regions with weaker external speculative demand, the impact of housing price changes on households’ consumption is mainly shown as the wealth effect.
Keywords: Housing price; Households’ consumption; Wealth effect; Crowding-out effect (search for similar items in EconPapers)
JEL-codes: O18 E20 R13 D50 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:49:y:2019:i:c:p:152-164
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