Real Estate Bubbles Test And Causality Analysis Of Metropolitans In China

Recent years, real estate industry experiences prosperity, increasing the whole economy and improving individual living situations in China. But real estate prices of metropolitans raise too much, which leads to an issue of real estate bubbles. Real estate industry is concerned with the whole economy, individual welfare and the security of finance. If there are real estate bubbles, the whole economy will be damaged and financial crises may occur. So the research of real estate bubble has theoretical and practical significances. This article attempts to analyze real estate demand, to set up a model to test real estate bubbles, to research on the causality of real estate bubbles and to give policy implications.This article has researched real estate bubbles'definition and test methods. Literatures are reviewed and insufficient sections are pointed out. This article has a review of bubbles definitions and has an analysis of rational bubble theory within rational expectation's frame. The article also discusses rational bubble theory's insufficiency and has a research of bounded rational bubble models including fads model and noise trader model. Then real estate bubbles are defined, real bubbles'harm are represented and real estate bubbles'test methods are summarizedThis article has set up a model and makes an empirical analysis to Shanghai housing market to test real estate bubbles by adding positive feedback variable to a general demand model. An analysis of real estate supply and demand has to be made. A real estate demand regression model, including variants of user's cost, credit, positive feedback behavior etc., is set up and an empirical analysis is made to Shanghai housing market. The results show that not only user's cost, credit etc., but also positive feedback behavior impact real estate demand. The existence of positive feedback behavior implies real estate bubbles occur. This is a test to real estate bubbles from demand side.This article has built spatial economic models for panel data to test real estate bubbles of metropolitans in China, using spatial statistics analysis method and spatial economics theory. Adaptive expectation's enfluence to price is considered as bubbles. So trational Adaptive expectation models could be used to test real estate bubbles with the use of panel data of metropolitans. But spatial dependence makes spatial and geographic factors have to be taken into account. Spatial autocorrelation Moran's I index is tested, and local spatial autocorrelation LISA is drawed. Then Spatial Lag Model and Spatial Error Model are built within the frame of spatial econometrics. Spatial Error Model is the appropriate model. The results show the existence of real estate bubbles in metropolitans of China.This article has a study of real estate bubbles'causality and has an analysis of house buyer's bouned rationality's enfluence to real estate bubbles. The research finds on the backround of marcoeconomic and real estate institutions, bouned rational house buyers'positive feedback behavior and expectation are direct factors to cause real estate bubbles. To research this bounded rationality, Evolutionary Game Theory is introduced.Then Replicator Dynamics Equation is deduced and Evolutionary Stable Strategy is consequently gained. The result shows that bounded rational house buyers'interaction with each other could lead to real estate bubbles. After the analysis of causality of real estate bubbles, policy implications are suggested from six aspects such as increasing land supply, collecting property tax, controlling real estate credit, etc.