What Determines China's Housing Price Dynamics? New Evidence from a DSGE-VAR

2017-04-19

 

Speaker£ºDr Zhirong Ou (Cardiff Business School)
Time£º14:30-16:00 April 25,2017(Tuesday)
Site£ºB131

Abstract£ºWe 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 2000 and 2014. We find that near 80% of the housing price fluctuation can be explained by the housing demand shock, which is also found to be the essential factor for housing price `bubbles' to happen. We also find that a prosperous housing market could have implied future economic growth, but empirically the marginal impact is small. But this also means that, for policy-makers who wish to stabilise the housing market, the cost on output reduction would be quite limited.