The Great Housing Boom of China

By Kaiji Chen, Y. Wen. 2014

298 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/c269e5ba073a758ebf1675be347496010fa476c6

Citations in the corpus

• Trends and Cycles in China’s Macroeconomy (2016, unknown): “As shown by Chen and Wen (2014), most of the increase in the share of private employment occurred between 1998 and 2004 (from 15% to 50%), while”
• Risks in China's Financial System (2018, unknown): “(2017), and Chen and Wen (2017). An important contributing factor to this concern is the lack of reliable statistics about the housing markets across the country.”