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

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.

Sisällysluettelo

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