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The relationship between housing investment and economic growth in China FA panel analysis using quarterly provincial data

Author

Listed:
  • Chen, Jie

    () (nstitute for Housing and Urban Research, Uppsala University)

  • Zhu, Aiyong

    () (Department of Word Economy)

Abstract

In this paper we investigate the long-run and short-run relationship between housing investment and economic growth in China using the quarterly province-level panel data for the period 1999 q1 to 2007 q4. Recently developed econometric techniques for panel unit root testing and heterogeneous panel cointegration analysis are employed. The empirical results provide clear support of a stable long-run relationship between housing investment, non-housing investment and GDP in China. We then estimate the long-run elasticity of GDP with respect to housing investment for the whole country as well as three sub regions. The variations across regions are detected and reasons for this fact are discussed. Based on the panel ECM, we show that there is bidirectional Granger causality between housing investment and GDP in both short run and long run for the whole country, while the impacts of housing investment on GDP behave strikingly differently in the three sub-regions of China.

Suggested Citation

  • Chen, Jie & Zhu, Aiyong, 2008. "The relationship between housing investment and economic growth in China FA panel analysis using quarterly provincial data," Working Paper Series 2008:17, Uppsala University, Department of Economics.
  • Handle: RePEc:hhs:uunewp:2008_017
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    Cited by:

    1. Michael, Bryane & Zhao, Simon, 2016. "Bubble Economics How Big a Shock to China’s Real Estate Sector Will Throw the Country into Recession, and Why Does It Matter?," EconStor Preprints 141314, ZBW - German National Library of Economics.
    2. repec:wbk:wbpubs:26520 is not listed on IDEAS
    3. Dreger, Christian & Zhang, Yanqun, 2010. "Is there a bubble in the Chinese housing market?," Discussion Papers 290, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.
    4. Sepehrdoust Hamid, 2010. "Efficiency Measurement of Housing Sector in Iran," Asian Journal of Law and Economics, De Gruyter, vol. 1(2), pages 1-21, December.
    5. repec:adb:adbacr:2365 is not listed on IDEAS

    More about this item

    Keywords

    Housing investment; Economic growth; Panel cointegration; Granger causality;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • L74 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Construction
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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