Not all cities are alike : House price heterogeneity and the design of macro-prudential policies in China

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Title: Not all cities are alike : House price heterogeneity and the design of macro-prudential policies in China
Author: Funke, Michael ; Tsang, Andrew ; Zhu, Linxu
Organization: Bank of Finland
Department / Unit: Institute for Economies in Transition (BOFIT)
Series: BOFIT Discussion Papers
Series number: 18/2018
Year of publication: 2018
Publication date: 14.11.2018
Pages: 36
Subject (yso): asunnot; hinnat; asuntomarkkinat
Keywords: Bofit-kokoelma; Kiina; kaupungit; makrovakaus
JEL: O18; E52; C38
Other keywords: China; Macro-Prudential Policies; House Prices; Cities
Abstract: This paper investigates the implementation of regionally differentiated macro-prudential policies in China. To assess the relative intensity of the city-level macro-prudential policies over time, we construct a time-varying city-level macro-prudential policy intensity indicator for 70 Chinese cities from 2010-2017. The empirical evidence shows China’s macro-prudential toolbox has gradually evolved toward city-level policies tailored to granular local conditions to mitigate risks.
Table of contents: Abstract 4 1 Introduction 5 2 City-level house price dynamics and development of macro-prudential policies in China 6 2.1 Major developments in Chinese housing prices 6 2.2 Development of city-level macro-prudential policy 9 2.3 Construction of city-level macro-prudential policy intensity indicator 13 2.4 Coherence between city-level housing prices and macro-prudential policy intensity 15 3 Econometric approach 17 4 Conclusions 22 References 24 Appendix A. House price indices and tiers of cities in China 26 Appendix B. Timeline of key macro-prudential policies related to the housing market by Chinese authorities 27 Appendix C. Macro-prudential policy intensity indicators 29 Appendix D. Bubble test results 32
Rights: https://helda.helsinki.fi/bof/copyright


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