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

Author

Listed:
  • Zhicheng Zhou

    (Chiang Mai University)

  • Prapatchon Jariyapan

    () (Chiang Mai University)

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.

Suggested Citation

  • Zhicheng Zhou & Prapatchon Jariyapan, 2013. "The impact of macroeconomic policies to real estate market in People's Republic of China," The Empirical Econometrics and Quantitative Economics Letters, Faculty of Economics, Chiang Mai University, vol. 2(3), pages 75-92, September.
  • Handle: RePEc:chi:journl:v:2:y:2013:i:3:p:75-92
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    DSGE models; policy analysis; China; housing;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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