Research On The Differential Pricing Of Land And The Stability Of Local Economy Based On DSGE Model

Under the framework of Liu,Wang and Zha(2013),by introducing the government’s land finance and land differential pricing,this thesis establishes a DSGE model.Then we forecast the consequences of different impacts on the whole economy under the local government’s land differential pricing policies,and evaluate the impact of land differential pricing on the local economy under the background of land finance.In the study of land problems in China,land finance is a key point.China’s state-owned land system determines the vital role of the government in land allocation.The local government’s land finance not only allocates land resources,but also creates financial revenue,which is one of the important factors affecting the development of local economy,and also the most controversial financial means of local government.At present,China’s land can be divided into two main categories according to its use:residential land and industrial land.In order to promote the rapid development of local economy,create tax revenue,improve GDP and promote employment,the price of industrial land by local government is often much lower than that of residential land,so as to stimulate enterprise production and create more benefits.Based on the land system of our country,this thesis constructs a DSGE model of three departments,including family,entrepreneur and local government,to discuss how the economy will fluctuate under the government land differential pricing.In the model,the land belongs to the local government departments.The government sells two kinds of land to families and entrepreneurs in two markets to meet the housing demand of families and the production demand of enterprises,and obtains financial income.At the same time,the government also obtains taxes from the production process of entrepreneurs.After introducing the role of the government in the land market into the general stochastic dynamic model,this thesis simulates the changes of various macroeconomic variables under various shocks,and predicts the impact on the economy under the land differential pricing policy.According to the conclusion of the forecast,this thesis gives some suggestions:for local governments,the implementation of differential pricing in land finance will often lead to short-term prosperity and long-term economic stagnation,so local governments should be cautious.