Inequality hikes, saving surges, and housing bubbles

Qingbin Zhao, Guoqiang Li, Xinhua Gu and Chun Kwok Lei

International Review of Economics & Finance, 2021, vol. 72, issue C, 349-363

Abstract: This paper uses theoretical and empirical models to analyze the effect of saving rates on housing prices under income inequality observed in fast-growing tourism resorts like Macao. The theoretical model predicts that rising inequality leads to larger asset bubbles through a higher rate of saving and a greater investment of saving in housing assets. The empirical model confirms that tourism growth and inequality spurt do foster saving surge and housing bubble. This work on Macao also shows that aggressive operation of VIP tourism and excessive use of foreign investment may be no good for economic efficiency and social equity. It is necessary for Macao to make full use of its ample public saving to pursue sustainable tourism development and autonomous economic growth. The government should spend a substantial portion of its idle saving to deal with social discontent over low real income and low housing affordability and to prevent social tensions from arising in Macao.

Keywords: Casino tourism; Income inequality; Saving rate; Housing bubble; DOLS regression; SEM estimation; Social discontent; Sustainable development (search for similar items in EconPapers)
JEL-codes: D63 E21 E61 F43 R21 R31 Z32 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056020302987
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:reveco:v:72:y:2021:i:c:p:349-363

DOI: 10.1016/j.iref.2020.12.012

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().