The inequality-housing price nexus in tourist resorts: theory and evidence

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

Asia-Pacific Journal of Accounting & Economics, 2020, vol. 27, issue 1, 132-150

Abstract: Fast expansion in casino gaming is widely perceived as an underlying reason for housing bubbles in tourist resorts such as Macao. Yet it remains unclear whether such bubbles have any bearing on income inequality that comes with tourism expansion. This paper provides a formal explanation for the inequality-housing price nexus by using a vector autoregressive model with exogenous variables (VARX) and an autoregressive distributed lag model (ARDL). We find that casino tourism expansion plays a fundamental role for both income inequality heightening and housing price hiking, with rising inequality also contributing significantly to housing bubbles. Our empirical findings accord well with theoretical predictions made in this paper. Useful policy implications can then be derived from those findings.

Date: 2020
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DOI: 10.1080/16081625.2020.1686842

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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