What determines China's housing price dynamics? New evidence from a DSGE-VAR

Liu, Chunping and Ou, Zhirong ORCID: https://orcid.org/0000-0002-4610-7183 2021. What determines China's housing price dynamics? New evidence from a DSGE-VAR. International Journal of Finance and Economics 26 (3) , pp. 3269-3305. 10.1002/ijfe.1962

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Abstract

We investigate what determines China's housing price dynamics using a DSGE‐VAR estimated with priors allowing for the featured operating of normal and “shadow” banks in China, with data observed between 2001 and 2014. We find that the housing demand shock, which is the essential factor for housing price “bubbles” to happen, accounts for near 90% of the housing price fluctuation. We also find that a prosperous housing market could have led to future economic growth, though quantitatively its marginal impact is small. But this also means that, for policy‐makers who wish to stabilize the housing market, the cost on output reduction would be rather limited.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Additional Information:	This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
Publisher:	Wiley
ISSN:	1076-9307
Date of First Compliant Deposit:	19 June 2020
Date of Acceptance:	18 June 2020
Last Modified:	14 May 2023 17:59
URI:	https://orca.cardiff.ac.uk/id/eprint/132650

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