IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/79791.html
   My bibliography  Save this paper

An Austrian Analysis of China´s Unsustainable Boom

Author

Listed:
  • Howden, David
  • XingBin Li, Jason

Abstract

Austrian Business Cycle Theory can shed light on the ways in which the current Chinese economic boom is unsustainable. On the one hand, government interventions, such as land monopolies, have raised costs for real estate developers. By limiting the availability of investment instruments and access to external markets, government interventions have created a strong demand for housing as a hedging tool. On the other hand, a loose monetary policy and artificially low interest rates have made the property market tempting for developers. Over-construction and over-consumption in the housing sector epitomise the capital structure analysis that Austrian economists regard as the core of their business cycle theory.

Suggested Citation

  • Howden, David & XingBin Li, Jason, 2015. "An Austrian Analysis of China´s Unsustainable Boom," MPRA Paper 79791, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:79791
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/79791/1/MPRA_paper_79791.pdf
    File Function: original version
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Yiping Huang & Xun Wang, 2011. "Does Financial Repression Inhibit or Facilitate Economic Growth? A Case Study of Chinese Reform Experience," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 73, pages 833-855, December.
    2. David Howden, 2010. "Knowledge shifts and the business cycle: When boom turns to bust," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 23(2), pages 165-182, June.
    3. David Howden & Yang Zhou, 2014. "China's One-Child Policy: Some Unintended Consequences," Economic Affairs, Wiley Blackwell, vol. 34(3), pages 353-369, October.
    4. Gul, Ferdinand A. & Kim, Jeong-Bon & Qiu, Annie A., 2010. "Ownership concentration, foreign shareholding, audit quality, and stock price synchronicity: Evidence from China," Journal of Financial Economics, Elsevier, vol. 95(3), pages 425-442, March.
    5. Lu, Yunlin & Guo, Haifeng & Kao, Erin H. & Fung, Hung-Gay, 2015. "Shadow banking and firm financing in China," International Review of Economics & Finance, Elsevier, vol. 36(C), pages 40-53.
    6. Zhang, Dingsheng & Cheng, Wenli & Ng, Yew-Kwang, 2013. "Increasing returns, land use controls and housing prices in China," Economic Modelling, Elsevier, vol. 31(C), pages 789-795.
    7. Zhang, Chengsi, 2013. "Money, housing, and inflation in China," Journal of Policy Modeling, Elsevier, vol. 35(1), pages 75-87.
    8. Coulson, N. Edward & Tang, Mingzhe, 2013. "Institutional and demographic influences on the presence, scale and geographic scope of individual Chinese real estate investment," Regional Science and Urban Economics, Elsevier, vol. 43(2), pages 187-196.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hickey, Gordon M. & Pouliot, Mariève & Smith-Hall, Carsten & Wunder, Sven & Nielsen, Martin R., 2016. "Quantifying the economic contribution of wild food harvests to rural livelihoods: A global-comparative analysis," Food Policy, Elsevier, vol. 62(C), pages 122-132.
    2. Lee, Susan E. & Braithwaite, Peter & Leach, Joanne M. & Rogers, Chris D.F., 2016. "A comparison of energy systems in Birmingham, UK, with Masdar City, an embryonic city in Abu Dhabi Emirate," Renewable and Sustainable Energy Reviews, Elsevier, vol. 65(C), pages 1299-1309.

    More about this item

    Keywords

    Austrian Business Cycle Theory; capital structure; China; housing bubble;

    JEL classification:

    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:79791. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.