关键词：房价变动 土地财政 金融加速器 经济波动
House Price Fluctuation, Land Finance and Business Cycle in China
MEI Dongzhou, CUI Xiaoyong and WU Yu
Summary：The rise and fall of house prices has correlated very highly with China’s gross domestic product (GDP) fluctuations since 2008,and many scholars believe that house prices have "kidnapped" the entire Chinese economy, leading the government into a dilemma of whether to stabilize growth or control house prices. How does such a limited sector move consistently with the macroeconomic volatility？Why is the Chinese economy tightly linked to the real estate sector？Through which channels do the house price fluctuations affect the whole economy？ Moreover,what are the key factors in this process？
To answer these questions,we analyzed the behavior of the major macroeconomic variables. We found that the local governments’ land finance behavior played a crucial role in the transmission from housing price changes to GDP fluctuations. In this regard,we introduced the real estate and non real estate sectors into the BGG model (Bernanke et al.,1999) along with the local governments to depict land finance. External shocks that influence house prices lead to changes in local governments’ fiscal revenues and expenditures by affecting land prices. A large part has flowed into the infrastructure. Accordingly,an increase in the house prices facilitates an expansion of the residential and infrastructure investment, and then increases the capital prices. This drives up the price level and reduces the purchasing power of the residents,crowding out consumption. While considering financial frictions,with the financial accelerator effect, this increases the net worth of the enterprises in the production sector,lowering their external financing premium, and thus brings about a further expansion of the business investment. As the housing and infrastructure investment accounts for half of the total investment in fixed assets, an increase in the housing and infrastructure investment leads directly to GDP fluctuations. Therefore, the existence of land finance tightly couples the cycle of house prices to the cycle of local government spending. Inspired by the "GDP Championships", local governments spend more on infrastructure construction, a sharp increase in which follows an increase in house prices. This directly increases the asset prices and further causes dramatic fluctuations in investment and GDP through the financial accelerator effect.
Our work contributes to the body of literature that examines the importance of the real estate sector with respect to the real economy from the following aspects.
Research discussing the effect of housing prices on economic fluctuations has ignored the role of land with Chinese characteristics; this paper makes up for this shortcoming. It was once generally assumed that both residents and enterprises needed land. They stood on both the supply and the demand side, and freely bought and sold land, and land prices were determined under these transactions. However, this is not the case in China. It is forbidden to trade land between residents and enterprises; the supply of land comes entirely from the local governments. More importantly, the land revenue in developed countries mainly comes from the collection of property tax on the stock of land or housing, while in China it comes from "land finance".
To match these stylized facts, this article builds a model on BGG, containing real estate and nonreal estate sectors, and local governments. This model replicates the fiscal behavior of the local governments. Our simulation results suggest that this model helps to explain how house prices "kidnap" the entire Chinese economy and sets up a basic framework for a future discussion on policy response.
Under this framework, we carry out a general equilibrium analysis of the relationships between house prices, land finance, and economic fluctuations; detail various channels through which house prices affect economic fluctuations; and discuss the role of different factors in the transmission including financial frictions. This is considerably significant for understanding the special status of the real estate sector and the role of land finance in economic fluctuations.
Keywords:House Prices Fluctuation; Land Finance; Financial Accelerator Effect; Business Cycle
JEL Classification:E30, E44, H54
姓名：梅冬州 崔小勇 吴娱 工作单位：