Business Faculty Publications

Title

Are housing prices improving GDP or vice versa? A cross-regional study of China.

Document Type

Article

Publication Date

6-30-2018

Publication Title

Applied Economics

Keywords

HPs, GDP, Bootstrap panel causality test

Disciplines

Business | Economics | Finance and Financial Management | Real Estate

Abstract

This study applies the bootstrap panel Granger causality test to examine the relationship between housing prices (HPs) and GDP across provinces in China. Empirical results show that HPs Granger cause GDP in the eastern region and in most provinces of the central region. Rapid industrialization and urbanization in the eastern region and the low-cost advantages of the central region promote housing investment and significantly affect GDP. However, GDP has no influence on HPs in the eastern region due to insufficient land supply, housing speculation and HPs deviating from the economic fundamentals. HPs do not Granger cause GDP in the western region because it is less attractive for housing investment. Also, GDP Granger causes HPs in the central and western regions that the economy can influence HPs. These findings could help the government formulate reasonable regional policies for the development of the housing market and economic growth.

DOI

10.1080/00036846.2017.1418078

Volume

50

Issue

29

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