What Drives Urban Consumption in Mainland China? The Role of Property Price Dynamics
Michael Funke and
No 152011, Working Papers from Hong Kong Institute for Monetary Research
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 period 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 theoretical model.
Keywords: Consumption; House Prices; China; Panel Data (search for similar items in EconPapers)
JEL-codes: E21 R31 C23 O53 (search for similar items in EconPapers)
Pages: 30 pages
New Economics Papers: this item is included in nep-cna, nep-mac, nep-tra and nep-ure
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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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