Housing Price and Fundamentals in a Transition Economy: The Case of the Beijing Market

25 Pages Posted: 20 Aug 2018

See all articles by Bing Han

Bing Han

University of Toronto, Rotman School of Management

Lu Han

University of Toronto - Rotman School of Management

Guozhong Zhu

University of Alberta - Department of Marketing, Business Economics & Law

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Date Written: August 2018

Abstract

This article develops a dynamic rational expectations general equilibrium framework that links house value to fundamental economic variables such as income growth, demographics, migration, and land supply. Our framework handles nonstationary dynamics as well as structural changes in fundamentals that are commonplace in transition economies. Applying the framework to Beijing, we find that the equilibrium house price and rent under reasonable parameterizations of the model are substantially lower than the data. We explore potential explanations for the discrepancies between the model and the data.

Suggested Citation

Han, Bing and Han, Lu and Zhu, Guozhong, Housing Price and Fundamentals in a Transition Economy: The Case of the Beijing Market (August 2018). International Economic Review, Vol. 59, Issue 3, pp. 1653-1677, 2018, Available at SSRN: https://ssrn.com/abstract=3233216 or http://dx.doi.org/10.1111/iere.12316

Bing Han (Contact Author)

University of Toronto, Rotman School of Management ( email )

Toronto, Ontario M5S 3E6
Canada
4169460732 (Phone)

Lu Han

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Guozhong Zhu

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

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