What drives urban consumption in mainland China?: The role of property price dynamics

Yu-Fu Chen, Michael Funke and Aaron Mehrotra

No 13/2011, BOFIT Discussion Papers from Bank of Finland, Institute for Economies in Transition

Abstract: This paper adds to the literature on wealth effects on consumption by disentangling house price effects on consumption for mainland China. In a stochastic modelling framework, the riskiness, rate of increase and persistence of house price movements have different implications for the consumption/housing ratio. We exploit the geographical variation in property prices by using a quarterly city-level panel dataset for the pe-riod 1998Q1 2009Q4 and rely on a panel error correction model. Overall, the results suggest a significant long run impact of property prices on consumption. They also broadly confirm the predictions from the theo-retical model. Keywords: Consumption, house prices, China, panel data JEL-Classification: E21, R31, C23, O53.

JEL-codes: E21 R31 C23 O53 (search for similar items in EconPapers)
Date: 2011-06-19
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Published in Published in Pacific Economic Review, Volume 22, Issue 3, August 2017: 383–409

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Related works:
Journal Article: What Drives Urban Consumption in Mainland China? The Role of Property Price Dynamics (2017)
Working Paper: WHAT DRIVES URBAN CONSUMPTION IN MAINLAND CHINA? THE ROLE OF PROPERTY PRICE DYNAMICS (2011)
Working Paper: What drives urban consumption in mainland china? The role of property price dynamics (2011)
Working Paper: What Drives Urban Consumption in Mainland China? The Role of Property Price Dynamics (2011)
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