What Can China Learn about the Way Property Price Bubbles Affect GDP Growth? A Bubble Economics Perspective

26 Pages Posted: 19 Nov 2020 Last revised: 8 Feb 2022

See all articles by Bryane Michael

Bryane Michael

University of Hong Kong Faculty of Law

Simon Zhao

The University of Hong Kong - Department of Geography

Date Written: November 7, 2020

Abstract

How far do China’s property prices need to drop in order to trigger a GDP reaction that looks like a price bubble bursting? What does this question tell us about the way Bubble Economies work? In this paper, argue for a separate analysis of ‘Bubble Economics’ – as the non-linear and often “systemic” (in the mathematical sense of the word) forces which cause significant misallocations of resources. Even the term Bubble Economics can help us keep in mind that when we look at such events, we are witnessing discontinuous jumps representing the radical change in underlying economic structures and fundamentals -- if even for a limited time.

Keywords: China recession, bubble economics, non-linear dynamics, asset bubbles, bubble economics

JEL Classification: D58, N15, L85, G01

Suggested Citation

Michael, Bryane and Zhao, Simon, What Can China Learn about the Way Property Price Bubbles Affect GDP Growth? A Bubble Economics Perspective (November 7, 2020). University of Hong Kong Faculty of Law Research Paper No. 2020/069, Available at SSRN: https://ssrn.com/abstract=3726522 or http://dx.doi.org/10.2139/ssrn.3726522

Bryane Michael (Contact Author)

University of Hong Kong Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

Simon Zhao

The University of Hong Kong - Department of Geography ( email )

Pokfulam Road
Hong Kong
China

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