Housing Price and Fundamentals in a Transition Economy: The Case of the Beijing Market
25 Pages Posted: 20 Aug 2018
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Housing Price and Fundamentals in a Transition Economy: The Case of the Beijing Market
Date Written: August 2018
Abstract
This article develops a dynamic rational expectations general equilibrium framework that links house value to fundamental economic variables such as income growth, demographics, migration, and land supply. Our framework handles nonstationary dynamics as well as structural changes in fundamentals that are commonplace in transition economies. Applying the framework to Beijing, we find that the equilibrium house price and rent under reasonable parameterizations of the model are substantially lower than the data. We explore potential explanations for the discrepancies between the model and the data.
Suggested Citation: Suggested Citation
Bing Han (Contact Author)
University of Toronto, Rotman School of Management ( email )
Toronto, Ontario M5S 3E6
Canada
4169460732 (Phone)
Lu Han
University of Toronto - Rotman School of Management ( email )
105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
Guozhong Zhu
University of Alberta - Department of Marketing, Business Economics & Law ( email )
Edmonton, Alberta T6G 2R6
Canada
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Housing Price and Fundamentals in a Transition Economy: The Case of the Beijing Market
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