What drives housing consumption in China? Based on a dynamic optimal general equilibrium model and spatial panel data analysis

Zhipeng DU, Wei Kun ZHANG, Yiming HE

Abstract


Abstract. This paper examines the housing sales in China from 2004 to 2015 utilizing an optimal dynamic general equilibrium theoretical framework combined with a macroeconomic model. The spatial panel econometric empirical results suggest that housing prices and economic growth have increased housing sales in China. However, since house is considered as a special commodity in China, and unemployment show negative impacts on housing sales.

Keywords. Energy use, Housing values, Optimal dynamic general equilibrium, Spatial panel econometrics, China.

JEL. Q41, R31, E10.

Keywords


Energy use; Housing values; Optimal dynamic general equilibrium; Spatial panel econometrics; China.

Full Text:


References


Aoki, K., Proudman, J., & Vlieghe, G. (2004). House prices, consumption, and monetary policy: A financial accelerator approach. Journal of Financial Intermediation 13(4), 414-435. doi. 10.1016/j.jfi.2004.06.003

Bclotti, F., Hughes, G., & Mortari, A.P. (2017). Spatial panel-data models using Stata, The Stata Journal, 17(1), 139-180.

Campbell, J.Y., & Cocco, F. (2007). How do house prices affect consumption? Evidence from micro data $. Journal of Monetary Economics 54(3), 591-621. doi. 10.1016/j.jmoneco.2005.10.016

Chen, J., Guo, F., & Zhu, A. (2009). Housing wealth, financial wealth and consumption in China. China & World Economy 17(3), 57-74. doi. 10.1111/j.1749-124X.2009.01150.x

Chen, J., Guo, F., & Wu, Y. (2011). One decade of urban housing reform in China: Urban housing price dynamics and the role of migration and urbanization, 1995–2005. Habitat International 35(1), 1-8. doi. 10.1016/j.habitatint.2010.02.003

Chen, N.-K., Chen, S.S., & Chou, Y.-H. (2010). House prices, collateral constraint, and the asymmetric effect on consumption. Journal of Housing Economics, 19(1), 26-37. doi. 10.1016/j.jhe.2009.10.003

Chow, G.C., & Niu, L. (2015). Housing prices in urban China as determined by demand and supply. Pacific Economic Review, 20(1), 1-16. doi. 10.1111/1468-0106.12080

Dimitrescu, E.-I., & Hurlin, C. (2012). Testing for Granger non-causality in heterogeneous panels, Economic Modelling, 29(4), 1450-1460. doi. 10.1016/j.econmod.2012.02.014

Dong, Z., Hui, E.C.M., & Jia, S. (2017). How does housing price affect consumption in China: Wealth effect or substitution effect? Cities, 64, 1–8. doi. 10.1016/j.cities.2017.01.006

Du, J., & Peiser, R.B. (2014). Land supply, pricing and local governments’ land hoarding in China. Regional Science and Urban Economics, 48, 180–89. doi. 10.1016/j.regsciurbeco.2014.07.002

Du, J., Yang, Y., Li, D., & Zuo, J. (2017). Do investment and improvement demand outweigh basic consumption demand in housing market? Evidence from small cities in Jiangsu, China. Habitat International, 66, 24-31. doi. 10.1016/j.habitatint.2017.05.006

Iacoviello, M. (2004). Consumption, house prices, and collateral constraints: A structural econometric analysis. Journal of Housing Economics, 13(4), 304-20. doi. 10.1016/j.jhe.2004.09.004

Im, K.S., Pesaran, M.H., Shin, Y. (2003). Testing for unit roots in heterogeneous panels, Journal of Econometrics, 115(1), 53-74. doi. 10.1016/S0304-4076(03)00092-7

Kartashova, K., & Tomlin, B. (2017). House prices, consumption and the role of non-mortgage debt R. Journal of Banking and Finance, 83, 121-134. doi. 10.1016/j.jbankfin.2017.06.012

Li, M., & Shen, K. (2013). Population aging and housing consumption: A nonlinear relationship in China. China & World Economy, 21(5), 60-77. doi. 10.1111/j.1749-124X.2013.12039.x

Li, S.-M. (2017). Homeownership and housing consumption change in urban China: Guangzhou under market transition. Urban Geography, 38(5), 752-770. doi. 10.1080/02723638.2016.1139877

Mayo, S., & Sheppard, S. (1996). Housing supply under rapid economic growth and varying regulatory stringency: An international comparison. Journal of Housing Economics, 5(3), 274-289. doi. 10.1006/jhec.1996.0014

Monkkonen, P., Wong, K., & Begley, J. (2012). Regional science and urban economics economic restructuring, urban growth, and short-term trading: The spatial dynamics of the Hong Kong housing market, 1992-2008. Regional Science and Urban Economics, 42(3), 396-406. doi. 10.1016/j.regsciurbeco.2011.11.004

Pesaran, M.H. (2003). Aggregation of linear dynamic models: an application to life-cycle consumption models under habit formation, Economic Modelling, 20(2), 383-415. doi. 10.1016/S0264-9993(02)00059-7

Pesaran, M.H. (2007). A simple panel unit root test in the presence of cross‐section dependence, Journal of Applied Econometrics, 22(2), 265-312. doi. 10.1002/jae.951

Phang, S.-Y. (2004). House prices and aggregate consumption: Do they move together? Evidence from Singapore. Journal of Housing Economics, 13(2), 101-119. doi. 10.1016/j.jhe.2004.04.003

Piazzesi, M., Schneider, M., & Tuzel, S. (2007). Housing, consumption and asset pricing $. Journal of Financial Economics, 83(3), 531-569. doi. 10.1016/j.jfineco.2006.01.006

Shih, Y.N., Li, H.C., & Qin, B. (2014). Housing price bubbles and inter-provincial spillover: Evidence from China. Habitat International, 43, 142-151. doi. 10.1016/j.habitatint.2014.02.008

Tang, M., & Coulson, N.E. (2017). The impact of China's housing provident fund on homeownership, housing consumption and housing investment. Regional Science and Urban Economics 63, 25-37. doi. 10.1016/j.regsciurbeco.2016.11.002

Wang, H.U.I., Su, F., Wang, L., & Tao, R.A.N. (2012). Rural housing consumption and social stratification in transitional China: Evidence from a national survey. Housing Studies, 27(5), 667-684. doi. 10.1080/02673037.2012.697548

Wang, S.-Y. (2011). Misallocation and housing prices: Theory and evidence from China. The American Economic Review, 101(5), 2081-2107. doi. 10.1257/aer.101.5.2081

Zabel, J.E. (2012). Migration, housing market, and labor market responses to employment shocks. Journal of Urban Economics, 72(2–3), 267-284. doi. 10.1016/j.jue.2012.05.006

Zhou, X., Chang, M.S., & Gibler, K. (2016). The asymmetric wealth effects of housing market and stock market on consumption in China. Journal of Asia Pacific Economy, 21(2), 196-217. doi. 10.1080/13547860.2015.1094176




DOI: http://dx.doi.org/10.1453/jepe.v5i1.1557

Refbacks

  • There are currently no refbacks.


Bookmark and Share


.......................................................................................................................................................................................................................................................................................................................................

Journal of Economics and Political Economy - J. Econ. Pol. Econ. - JEPE - www.kspjournals.org

ISSN: 2148-8347

Editor: jepe@ksplibrary.org   Secretarial: secretarial@ksplibrary.org   Istanbul - Turkey.

Copyright © KSP Library