What drives urban consumption in mainland China? The role of property price dynamics.

Yu-Fu Chen (Lead / Corresponding author), Michael Funke, Aaron Mehrotra

    Research output: Contribution to journalArticle

    2 Citations (Scopus)
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    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 data set 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
    Pages (from-to)383-409
    Number of pages27
    JournalPacific Economic Review
    Issue number3
    Early online date16 Mar 2016
    Publication statusPublished - 27 Aug 2017


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