Research On Generalized Wealth Effects Of Real Estate Price Rising In China

Since market-oriented reform in1998, China's real estate market has entered a high-speed development access. With the real estate price continued to rising, domestic scholars and policy authorities have paid close attention to the problem. However, the rapid increasing of real estate wealth caused by real estate price rising is how to affect consumption and investment, thereby how to affect macroeconomic. Its mechanism has not been systematically combing, and the extent of its effect has not consistent conclusion.The research topic of this dissertation is generalized wealth effects of real estate price rising in China. Firstly, this dissertation deepens and riches the conception of real estate wealth effect. Based on the theory of macroeconomics, money and banking and financial economics, combined with the relevant theory of behavioral sciences and psychology, using the methods of theoretical modeling, econometric analysis, statistical analysis and comparative analysis etc, this dissertation tries to answer these questions: accompanied by the rapid growth of real estate price over the past decade after China's real estate market-oriented reforms, real estate wealth has been increasing rapidly, what influence have been made to consumption and investment at the micro level, what influence have been made to financial stability and price stability in the macro level? If has the real estate wealth gap widening the income gap? How should the authorities concern about real estate and effectively use and interpret the information of real estate price.The main works and conclusions of this dissertation are as follows:As a research starting and basis for subsequent chapters, this dissertation firstly empirical analyze the "irrational exuberance" of China's real estate prices rising. Based on the investment properties of real estate, using the methods of non-stationary panel econometric, this dissertation tests the relationship between housing price and rent. The result shows that China's housing price has gone beyond the fundamentals determined by the rent, the real estate price has shown irrational exuberance.Based on theoretical analysis on the mechanisms and channels of wealth effect in real estate market to consumptions, this dissertation analyzes the influence of real estate price rising to consumptions with the macro-data and micro-data. The empirical result shows that the housing wealth has significantly promoted residents'consumption in china in past ten yeas. But the housing wealth effect has diminished with the growth of housing wealth. And China's real estate wealth effect plays differently in different regions and different types of families, and is different with the developed countries.Through the generalized wealth effects, the real estate price rising not only effects on the consumption, but also influences investment, and thus impacts on the macroeconomic. Using the micro-level sample data of house purchasing in certain city of China, this dissertation finds that the residents have beard a higher mortgage per square meter and every yuan of income have leaded a higher housing consume when housing price was higher. This shows that the generalized wealth effect of housing consumption is being. Using the national macro-level data, this dissertation finds that real estate price rising has improved the development of real estate investment and consumption, fixed investment, and has produced a significant promotion effect on economic growth.Based on introducing the theory of"location of consumption", the effect of housing wealth gap caused by real estate price rising is been studied. Referring to the theory of"Gini coefficient"and"income mobility", using the panel survey data, this dissertation measures the housing wealth gap from the"static"and"dynamic"perspectives. The result shows that housing wealth accumulates rapidly to high-income groups and the income gap exacerbates along with housing prices rising. The"horizontal mobility"of real estate wealth is increasing as the real estate price rising, but the"positional mobility"is lower. The welfare of specific groups is reduced.Real estate price and credit expansion are mutually reinforcing, and then leading to financial instability, which is another macro-level effect of generalized wealth effect of real estate. Using and expanding the general equilibrium model, this dissertation analyzes theoretically the relationship between real estate price, credit expansion and financial instability. Referring to the DCC-MGARCH model, the empirical result shows that the dynamic correlation between real estate investment and credit would increase as real estate price rising. This shows that the financial accelerator effect is being as real estate prices rising in China. Chinese policy authorities should pay more attention to the risk exposure of real estate credit because it is underestimated.Real estate price would affect the aggregate demand and supply through the channel of consumption and investment, and then effect inflation and output, which is another macro-level effect of generalized wealth effect of real estate. This dissertation analyzes the mechanisms and channels from the perspectives of physical and financial assets. With the extended hybrid IS-PC model which coefficients estimated by the method of SUR, the result shows that the impact of real estate price fluctuation on inflation is significant exist. On the basis of combing the main viewpoints about how to respond to asset price volatility, by building China's financial conditions index (FCI), this dissertation discovers that real estate price accounts for a larger weight in FCI than stock price index, interest rate and exchange rate, and that the FCI index is a short-term indicator of monetary policy because it is a good predictive power of inflation. The main innovation of this dissertation is reflected in the following five areas:(1) The concept of real estate wealth effect is enriched and deepens. Which not only expand the research vision from the micro-level to the macro-level, but also deepen and systematize the real estate wealth effect study.(2) Firstly using non-stationary panel method to study the generalized wealth effect of China's real estate price rising. This dissertation empirical test the irrational exuberance of real estate, the wealth effect, the relationship between real estate price and influence using the latest non-stationary panel methods including panel unit root, panel cointegration and panel DOLS methods. These methods overcome the questions of low-effect from small samples and ignored the differences among different cities in past similar researches, improve the reliability of the study.(3) This dissertation investigates the housing wealth effect by firstly using large-scale families survey micro data. Using the families'micro survey data does not only solve the questions of small sample existed in early relevant studies using the macro data, but also testes the families'individual differences in behavior.(4) From the "static" and "dynamic" perspective to study the wealth gap(innovation from research object. Different from previous descriptive analysis, this dissertation measures the housing wealth gap from the"static"and"dynamic"perspectives, referring to the theory of"Gini coefficient"and"income mobility", using the panel survey data.(5) Using the DCC-MGARCH model to study the financial accelerator of China's real estate price rising (innovation from research methods). Using and expanding the general equilibrium model, this dissertation analyzes theoretically the relationship between real estate price, credit expansion and financial instability. Referring to the DCC-MGARCH model, this dissertation empirical test the effect of financial accelerator.