Impact of international capital flows on real estate market: The empirical test in China from 1998 to 2006

Bo Song and Bo Gao ()
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Bo Song: Department of Economics, Nanjing University, Nanjing 210093, China
Bo Gao: Department of Economics, Nanjing University, Nanjing 210093, China

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2007, vol. 2, issue 4, 520-531

Abstract: Taking the inflation into consideration and making use of the quarter data of the actual foreign investment, housing and land prices in China from 1998 to 2006, this paper examines the relationship between housing prices and international capital flows using Error Correction Model (ECM) and Granger causality test. Results show that in the short run, the increase of housing prices attracts the inflow of foreign capitals; in the long run, foreign capitals help to boost the rise of housing prices. Therefore, at present, Chinese government must impose effective restrictions on the flow of foreign capital into the real estate market.

Keywords: inflation; international capital flows; real estate prices (search for similar items in EconPapers)
JEL-codes: D4 E44 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (1)

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