| The role of local governments in the increase of housing prices in China hasattracted a lot of attentions. Some people say the government officers’ promotionsystem, which focuses on the GDP growth too much, should be blamed. Financialdevelopment and marketization have huge impacts on the transitional countries such asChina. In this paper, we tried to throw some light into the impacts of governmentofficers’ promotion pressure and financial development on the increases of housingprices, which might help us understand the acts of local governments in real estatemarket.We developed a housing stock-adjusted model, based on which an econometricmodel was derived, using increase of housing prices as dependent variable, thefundamentals, promotion pressure and financial development as independent variables.In our empirical study, we estimated the econometric model using data from thirty-fourlarge and median-size cities in China. After that, we divided the whole sample into twogroups according the governments control power on the economic resources in order tosee the impacts of government power on our results. We also did the robust analysis bychanging the calculation method of the promotion pressure.According to our research, we found the local government officers’ promotionpressure had positive impact on the increases of housing price, while the impact offinancial development was inversed-U shape. The financial development would pushthe increase of housing prices until the score of financial marketization reached5.5. Wealso found the control power of local government could accelerate the positive impactsof promotion pressure on increase of housing price. In cities with higher governmentcontrol, the financial development could slow down the increase of housing price. |
