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The impact of macroeconomic policies to real estate market in People's Republic of China

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  • Zhicheng Zhou

    (Chiang Mai University)

  • Prapatchon Jariyapan

    ()
    (Chiang Mai University)

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    Abstract

    This paper develops a dynamic stochastic general equilibrium (DSGE) model with housing sector to study the effect of China’s new policies to real estate market. The model is estimated by Bayesian Maximum Likelihood methods using ten macro-economic time series over the period Q1 1999 to Q4 2011. The results show that the property tax policy with focus on limiting housing demand by increasing households’ cost of holding housing is good at controlling house prices, but it has a negative impact on housing firms. The land policy concentrated on adjusting housing supply by declining the land cost of housing firms is weak at diminishing housing prices, but it can promote the development of the housing sector and keep real estate market stable.

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    Bibliographic Info

    Article provided by Faculty of Economics, Chiang Mai University in its journal The Empirical Econometrics and Quantitative Economics Letters.

    Volume (Year): 2 (2013)
    Issue (Month): 3 (September)
    Pages: 75 - 92

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    Handle: RePEc:chi:journl:v:2:y:2013:i:3:p:75-92

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    Related research

    Keywords: DSGE models; policy analysis; China; housing;

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    1. King, Robert G. & Plosser, Charles I. & Rebelo, Sergio T., 1988. "Production, growth and business cycles : II. New directions," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 309-341.
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    3. Gervais, Martin, 2002. "Housing taxation and capital accumulation," Journal of Monetary Economics, Elsevier, vol. 49(7), pages 1461-1489, October.
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    18. Argia M. Sbordone & Andrea Tambalotti & Krishna Rao & Kieran Walsh, 2010. "Policy analysis using DSGE models: an introduction," Economic Policy Review, Federal Reserve Bank of New York, issue Oct, pages 23-43.
    19. Gabriel, Vasco & Levine, Paul & Pearlman, Joseph & Yang, Bo, 2011. "An Estimated DSGE Model of the Indian Economy," Working Papers 11/95, National Institute of Public Finance and Policy.
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    21. repec:fth:harver:1424 is not listed on IDEAS
    22. Goulder, Lawrence H., 1989. "Tax policy, housing prices, and housing investment," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 281-304, May.
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