In:
American Economic Journal: Macroeconomics, American Economic Association, Vol. 9, No. 2 ( 2017-04-01), p. 73-114
Abstract:
China’s housing prices have been growing nearly twice as fast as national income over the past decade, despite a high vacancy rate and a high rate of return to capital. This paper interprets China’s housing boom as a rational bubble emerging naturally from its economic transition. The bubble arises because high capital returns driven by resource reallocation are not sustainable in the long run. Rational expectations of a strong future demand for alternative stores of value can thus induce currently productive agents to speculate in the housing market. Our model can quantitatively account for China’s paradoxical housing boom. (JEL O16, O18, P24, P25, R21, R31)
Type of Medium:
Online Resource
ISSN:
1945-7707
,
1945-7715
DOI:
10.1257/mac.20140234
Language:
English
Publisher:
American Economic Association
Publication Date:
2017
detail.hit.zdb_id:
2452641-1
detail.hit.zdb_id:
2442376-2
