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Housing Bubble and Government Regulation: Evidence from China

In: Papers presented during the Narodowy Bank Polski Workshop: Recent trends in the real estate market and its analysis - 2015 edition

Author

Listed:
  • Jerry Cao
  • Bihong Huang
  • Rose Neng Lai

Abstract

Facing rampant real estate price surge, Chinese government imposed the home purchase restriction policy to dampen the speculation activity in major cities in 2010. Using a comprehensive dataset covering the real estate markets across various cities, we find that the policy triggered substantial decline in the property price and transaction volume. Cities having higher reliance on real estate sector for fiscal revenue and economic growth experienced greater drop in housing prices following the policy implementation. However, the policy had no measurable effects on the construction boom, hinting the limitation of the policy to correct the housing bubble. These evidences are robust to endogeneity concerns addressed by both two-step difference-in-difference approach and endogeneous treatment effects regressions.

Suggested Citation

  • Jerry Cao & Bihong Huang & Rose Neng Lai, 2016. "Housing Bubble and Government Regulation: Evidence from China," Chapters from NBP Conference Publications, in: Hanna Augustyniak & Jacek Łaszek & Krzysztof Olszewski & Joanna Waszczuk (ed.), Papers presented during the Narodowy Bank Polski Workshop: Recent trends in the real estate market and its analysis - 2015 edition, chapter 10, pages v2, 5-67, Narodowy Bank Polski.
    • Handle: RePEc:nbp:nbpchp:2-10
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    More about this item

    Keywords

    home purchase restriction policy; housing bubble; China; difference in difference; endogeneous treatment effects;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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