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The Optimal Land Supply Policy Of Chinese Local Government

Author

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  • YIYAO HE

    (School of Economics, Zhejiang University, Hangzhou, P. R. China)

Abstract

This paper constructs a DSGE model to study the relationship between the Chinese local government’s land policy, social welfare and economic fluctuations. I find that increasing the supply of residential land by the local government will reduce housing price and increase social welfare, but it crowds out the amount of industrial land and decreases final output and social welfare as well. This trade-off brings out an optimal supply ratio of residential land, 40%, in deterministic steady-state equilibrium. Besides, the local government is able to use dynamic pro-cyclical residential land supply policy to dampen economic fluctuations in China’s macroeconomy.

Suggested Citation

  • Yiyao He, 2023. "The Optimal Land Supply Policy Of Chinese Local Government," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(05), pages 1731-1750, September.
    • Handle: RePEc:wsi:serxxx:v:68:y:2023:i:05:n:s0217590819500644
    DOI: 10.1142/S0217590819500644
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    More about this item

    Keywords

    Land supply; social welfare; economic fluctuations; local government;
    All these keywords.

    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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