Dundee Discussion Papers in Economics 255: What drives urban consumption in mainland china? The role of property price dynamics

Yu-Fu Chen, Michael Funke, Aaron Mehrotra

    Research output: Working paperDiscussion paper

    Abstract

    This paper adds to the literature on wealth effects on consumption by disentangling house price effects on consumption for mainland China. In a stochastic modelling framework, the riskiness, rate of increase and persistence of house price movements have different implications for the
    consumption/housing ratio. We exploit the geographical variation in property prices by using a
    quarterly city-level panel dataset for the period 1998Q1 – 2009Q4 and rely on a panel error correction
    model. Overall, the results suggest a significant long run impact of property prices on consumption.
    They also broadly confirm the predictions from the theoretical model.
    Original languageEnglish
    PublisherUniversity of Dundee
    Number of pages28
    Publication statusPublished - Jun 2011

    Publication series

    NameDundee Discussion Papers in Economics
    PublisherUniversity of Dundee
    No.255
    ISSN (Print)1473-236X

    Keywords

    • Consumption
    • house prices
    • China
    • Panel data

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