What drives urban consumption in mainland China? : The role of property price dynamics

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Title: What drives urban consumption in mainland China? : The role of property price dynamics
Author: Chen, Yu-Fu ; Funke, Michael ; Mehrotra, Aaron
Organization: Bank of Finland
Department / Unit: Institute for Economies in Transition (BOFIT)
Series: BOFIT Discussion Papers
Series number: 13/2011
Year of publication: 2011
Publication date: 19.6.2011
Published in: Published in Pacific Economic Review, Volume 22, Issue 3, August 2017: 383–409
Pages: 35 s.
Keywords: Kiina; kulutus; kaupungit; hinnat; kiinteistöt; asunnot; Bofit-kokoelma
JEL: E21; R31; C23; O53
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 pe-riod 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 theo-retical model. Keywords: Consumption, house prices, China, panel data JEL-Classification: E21, R31, C23, O53.
Rights: https://helda.helsinki.fi/bof/copyright


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