Abstract

http://ssrn.com/abstract=1868042
 
 

References (29)



 


 



What Drives Urban Consumption in Mainland China? The Role of Property Price Dynamics


Yu-Fu Chen


University of Dundee - Department of Economic Studies

Michael Funke


Hamburg University, Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Aaron N. Mehrotra


Bank for International Settlements (BIS)

May 27, 2011

HKIMR Working Paper No. 15/2011

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 period 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 theoretical model.

Number of Pages in PDF File: 30

Keywords: consumption, house prices, China, panel data

JEL Classification: E21, R31, C23, O53

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Date posted: June 20, 2011  

Suggested Citation

Chen, Yu-Fu and Funke, Michael and Mehrotra, Aaron N., What Drives Urban Consumption in Mainland China? The Role of Property Price Dynamics (May 27, 2011). HKIMR Working Paper No. 15/2011. Available at SSRN: http://ssrn.com/abstract=1868042 or http://dx.doi.org/10.2139/ssrn.1868042

Contact Information

Yu-Fu Chen
University of Dundee - Department of Economic Studies ( email )
Dundee DD1 4HN, Scotland
United Kingdom
+44 1382 344 383 (Phone)
+44 1382 344 691 (Fax)
Michael Funke (Contact Author)
Hamburg University, Department of Economics ( email )
Von-Melle-Park 5
Hamburg, 20146
Germany
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Aaron N. Mehrotra
Bank for International Settlements (BIS) ( email )
Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland
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