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Government Policy and Land Price Dynamics: A Quantitative Assessment of China's Factor Market

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  • Vipul Bhatt
  • Mouhua Liao
  • Min Qiang Zhao

Abstract

This paper examines the role played by government policy regarding factors of pro- duction in shaping the dynamics of a growing economy. Using land as an example of an important productive factor, we develop a quantitative model with endogenous land price policy regimes to rationalize the following three economic reforms in China: introduction of non-SOEs (state-owned enterprises); reform of SOEs characterized by their retreat from the competitive manufacturing sector and the establishment of state monopolies in factor markets around 2000; and a regime switch from dual-track land pricing to land price discrimination by use. We calibrate our model to key economic indicators for China and quantify the e ects of these reforms. Our calibrated mo- del can match several stylized facts for China after 2000 such as widening disparity in land prices by use, rapid growth in housing price, land revenue, and government expenditures on public goods, and the steep decline in labor share for income.

Suggested Citation

  • Vipul Bhatt & Mouhua Liao & Min Qiang Zhao, 2019. "Government Policy and Land Price Dynamics: A Quantitative Assessment of China's Factor Market," Working Papers 2019-07-03, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    • Handle: RePEc:wyi:wpaper:002433
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    More about this item

    Keywords

    Dual-track Pricing; Land Price Discrimination; State Monopoly; Land Market Reforms.;
    All these keywords.

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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