Research On Effect Of Fiscal Decentralization On Housing Prices In China

Since the housing system has been reformed,the real estate market develops rapidly which has made outstanding contributions to economic growth and increase employment,and becomes a pillar industry of China's economy. However,at the same time, the rapid development of the real estate industry also brings rising house prices. High housing prices hinder China's upgrading of industrial structure and economic structure adjustment, and is bad to social stability, seriously restricting China's economic sustainable development. The continuing rise in housing p rices has caused extensive concern of social public,and has become an important problem to be solved by the government.The housing prices continued rising in China,which has caused widespread concern of the academic circles. The academic circles has been carried out exploratory study about the rising prise, but most of the study research from the relationship between supply and demand, cost composition, the financial aspects, and the study about the influence of institutional factors on housing prices is very limited. This article research effects of fiscal decentralization on prices from the fiscal decentralization system factors. Firstly, this paper introduces the related theory of fiscal decentralization, and reviews the relevant literature on fiscal de centralization and house prices. Secondly, in the theoretical analysis, fiscal decentralization has caused the local government competition of revenue and expenditure, and affected the behavior of local government, thus causing the rising housing price; in data statistics, expenditure decentralization, revenue decentralization a nd prices are highly correlated. Thirdly, based on the panel data of 31 provinces during 1999-2013 in China, this paper establishes a PVAR model to investigate the relationship between fiscal decentralization and housing price through GMM estimation ?impulse response function and variance decomposition analysis. The results show that : the fiscal decentralization is an important reason for rising house prices; decentralization of expenditure and revenue decentralization have promoted the rising prices and the impact on prices has regional differences; the effect of expenditure decentralization on housing prices is better than the effect of revenue decentralization. Finally, according to the conclusion of the thesis, this paper puts forward the corresponding economic policy.