Real Estate, Interest Rates, and Crowding-out Effects
Tianye Lin (),
Yangyang Ji and
Sen Zhang ()
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Tianye Lin: China Economics and Management Academy, Central University of Finance and Economics
Sen Zhang: China Economics and Management Academy, Central University of Finance and Economics
No 613, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics
In this paper, we reveal robust findings of the co-movement of real-estate loans, real-estate booms, and market interest rates by observing Chinese data and using vector auto-regressions. We construct a two-sector credit market partial equilibrium model to explain this phenomenon. The findings show that rising real-estate prices are a cause for this co-movement. We believe that an expansion in demand for real-estate loans has brought about an increase in interest rates in the credit market since 2002, which has crowded-out credit for the non-land sector. We also find that rising real-estate prices can lead to expansion in demand for real-estate loans.
Pages: 14 pages
New Economics Papers: this item is included in nep-cna and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:wpaper:613
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