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What Drives Urban Consumption in Mainland China? The Role of Property Price Dynamics

Yu-Fu Chen, Michael Funke and Aaron Mehrotra

No 152011, Working Papers from Hong Kong Institute for Monetary Research

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 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
Date: 2011-05
New Economics Papers: this item is included in nep-cna, nep-mac, nep-tra and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

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