蝌蚪网 Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
The Great Housing Boom of China
蝌蚪网 Journal: Macroeconomics
(pp. 73–114)
Abstract
China's housing prices have been growing nearly twice as fast as national income over the past decade, despite a high vacancy rate and a high rate of return to capital. This paper interprets China's housing boom as a rational bubble emerging naturally from its economic transition. The bubble arises because high capital returns driven by resource reallocation are not sustainable in the long run. Rational expectations of a strong future demand for alternative stores of value can thus induce currently productive agents to speculate in the housing market. Our model can quantitatively account for China's paradoxical housing boom.Citation
Chen, Kaiji, and Yi Wen. 2017. "The Great Housing Boom of China." 蝌蚪网 Journal: Macroeconomics 9 (2): 73–114. DOI: 10.1257/mac.20140234Additional Materials
JEL Classification
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- P24 Socialist Systems and Transitional Economies: National Income, Product, and Expenditure; Money; Inflation
- P25 Socialist Systems and Transitional Economies: Urban, Rural, and Regional Economics
- R21 Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
- R31 Housing Supply and Markets