What determines China's housing price dynamics? New evidence from a DSGE-VAR
Chunping Liu () and
Zhirong Ou ()
No E2017/4, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section
We investigate what determines China's housing price dynamics using a DSGE-VAR estimated with priors allowing for the featured operating of normal and 'shadow' banks in China, with data observed between 2001 and 2014. We find that the housing demand shock, which is the essential factor for housing price 'bubbles' to happen, accounts for near 90% of the housing price áuctuation. We also find that a prosperous housing market could have led to future economic growth, though quantitatively its marginal impact is small. But this also means that, for policy-makers who wish to stabilise the housing market, the cost on output reduction would be rather limited.
Keywords: Housing price; Bubbles; Market spillovers; DSGE-VAR; China (search for similar items in EconPapers)
JEL-codes: C11 E32 E44 R31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-mac, nep-tra and nep-ure
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