Chinese Real Estate Market Performance: Stock Market Linkages, Liquidity Pressures, and Inflationary Effects
The Chinese Economy, Forthcoming
34 Pages Posted: 26 Feb 2013
Date Written: February 26, 2013
The 2009 surge in bank lending in China was accompanied by allegations of substantial funds being funneled into the nation's stock and property markets. This paper uses 1999-2011 data to examine the possible linkages between lending activity, real estate prices, stock prices and inflation. We find empirical support for housing prices responding to increases in liquidity and lending rates along with evidence of co-determination of stock prices and housing prices. House price inflation also appears to consistently impact the overall inflation rate in China based on both causality testing and VAR estimation.
Keywords: China, real estate, share prices, lending, inflation, Shanghai
JEL Classification: E44, E50
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