An Austrian Analysis of China´s Unsustainable Boom

David Howden and Jason XingBin Li

MPRA Paper from University Library of Munich, Germany

Abstract: Austrian Business Cycle Theory can shed light on the ways in which the current Chinese economic boom is unsustainable. On the one hand, government interventions, such as land monopolies, have raised costs for real estate developers. By limiting the availability of investment instruments and access to external markets, government interventions have created a strong demand for housing as a hedging tool. On the other hand, a loose monetary policy and artificially low interest rates have made the property market tempting for developers. Over-construction and over-consumption in the housing sector epitomise the capital structure analysis that Austrian economists regard as the core of their business cycle theory.

Keywords: Austrian Business Cycle Theory; capital structure; China; housing bubble (search for similar items in EconPapers)
JEL-codes: B53 E32 E58 R31 R52 (search for similar items in EconPapers)
Date: 2015
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Published in Economic Affairs 35.3(2015): pp. 443-452

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Journal Article: An Austrian Analysis of China's Unsustainable Boom (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:79791

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