What drives urban consumption in mainland China? : The role of property price dynamics
Chen, Yu-Fu; Funke, Michael; Mehrotra, Aaron (19.06.2011)
JulkaisusarjaBOFIT Discussion Papers
JulkaisijaBank of Finland
Julkaisun pysyvä osoite onhttps://urn.fi/URN:NBN:fi:bof-201408072227
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.
Published in Pacific Economic Review, Volume 22, Issue 3, August 2017: 383–409