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The General Equilibrium Effect Of Real-estate Price Fluctuation On Macroeconomic

Posted on:2010-10-09Degree:DoctorType:Dissertation
Country:ChinaCandidate:P F YuanFull Text:PDF
GTID:1119360275488075Subject:Financial engineering
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After many years of rapid growth, the real estate industry has already developed into one of the pillar industries in China's major cities, and its growth has already become an important drive force in China's economic growth. However, in the process of rapid growth of real estate industry, the continuously rising housing price has not only caused some serious social problems, but also brought great hidden dangers for great swings in macroeconomic. Since the outbreak of subprime lending crisis in the United States in 2007, influenced by finance crisis and the global economic recession, both exports and domestic investment in China have declined on some extent, thus the risk of economy decline is becoming greater. In this situation, the potential great impact brought by sharp fall of housing price on the finance industry and the whole national economy is another very important factor that deciding the future state of China's economy.It has already become an undoubted fact that the fluctuation of real estate industry has become one of the important causes of macroeconomic fluctuation, with the complex interactions between real estate industry and the national economic system, the management of real estate industry is quite a very complex system engineering. In this context, how to measure the impact of real estate fluctuation on macroeconomic is undoubtedly a very important research topic.Based on the analysis of real-estate economy fluctuation theory, with vector error correction model (VECM) and computable general equilibrium model (CGE), we investigate the characteristics of real estate price fluctuation and the impact of real estate price change on macroeconomic in China from quantitative angle. The main conclusions are as follows:Firstly, The results of the research on housing price fluctuation in China in recent years using vector error correction model show that, in the long run, land price, bank loans on real estate industry and especially bank loans on real estate supply are main causes of housing price rising. Although income increase of the households have significant and positive influence on housing price, this kind of influence is relative small, the change of interest rates and housing rental prices all have no significant influence on housing price rising. While in the short term, variables which have significant impacts on housing price fluctuation are still land price and bank loans on real estate supply and demand, all other variables have no significant influence on housing price fluctuation.Secondly, with the situation in 2005 as a benchmark, using computable general equilibrium model, we investigate the impacts of real estate price change on marcoeconomic and sectoral economic from a quantitative angle, the simulation results show that:(1) The rising and fall of real estate prices will cause corresponding increase and reduction in output of real estate industry and all other industries. Relatively, the impacts of real estate price change on industries such as heavy industry, utilities, minning, and real estate industry itself are great, while the impacts of it on industries such as light industry, finance and insurance industry and the service industries are relatively small.(2) The rising and fall of real estate price will cause corresponding rise and decline of the macroeconomic variables such as total output, GDP, employment, investment, import and export, consumer price index, and so on. Although the values of these macroeconomic variables rise in a linear manner when the extent of real estate price rising increase, but the speed of decline of these macroeconomic variables is accelerated when the extent of real estate price rising increase. Relatively, the impacts of real estate price change on the macroeconomic variables such as GDP, employment, import and export are great, while the impacts of it on the macroeconomic variables such as total output, consumption are relatively small.(3) Both of the rising and fall of real estate price will cause the decline of real income in all kinds of households, and in the scenes of real estate price decline, the extent of real income decline of the residents is even more great. Relatively speaking, the impacts of real estate price change on the urban residents are greater than that on the rural residents. For urban residents, the impacts of real estate price rising on low-income and medium-income residents are greater than that on the high-income classes, while in the scenes of real estate price fall, the impacts of real estate price rising on low-income and medium-income residents are smaller than that on the high-income classes. In the scenes of real estate prices rising, the real income of both the government and the enterprise will rise, while the ultimate influence of real estate price fall on these two sectors is the decline of their real income.(4) Overall, under the stimulation of real estate price rising, the growth of the real estate industry have great growth effect on the whole national economy, but in the scenes of real estate price falling, the adverse impacts on the real estate industry will bring even more negative impacts to the national economy, this is especially true in the scenarios that real estate price changes tempestuously.
Keywords/Search Tags:Real Estate Price, Vector Error Correction Model (VECM), Computable General Equilibrium Model (CGE)
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