L& Supply, Housing Price & Household Saving in Urban China: Evidence from Urban Household Survey
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| Title | L& Supply, Housing Price & Household Saving in Urban China: Evidence from Urban Household Survey
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| Author | Chen Binkai and Yang Rudai |
| Organization | Central University of Finance and Economics, Xiangtan University |
| Email | chenbinkai@gmail.com；rudaiyang@gmail.com |
| Key Words | UHS; Housing Price; Household Saving; L& Supply |
| Abstract | Based on China's urban household survey (UHS) conducted by National Bureau of Statistics from 2002 to 2007, this paper studies the relationship between government l& supply, housing prices & urban household savings in China. The results reveal that the rising housing prices have induced people to save more: one percentage point increase in housing prices have led urban household savings rate to rise by 0.068 percentage points. These empirical results implies that the household savings rate have risen by 4.88 percentage points due to the rising housing price, which account for 64.6% of the increasing saving rate during 2002 and 2007. Further research shows that the rising housing prices have mainly affected people with lower income levels, rent a house or own a small house. Meanwhile, the housing prices have not only affected the young people, but also the old people. We use government l& supply as an instrument of housing price to alleviate the endogeneity problem. 2SLS regression results show that the less the l& supply, the higher the level of housing prices, the higher the household savings rate. This study implies that, to increase the consumption ratio and achieve sustainable growth in China, the fundamental way is to reform the existing tax system and reduce local government's incentive to create profits from l& supply. |
| Serial Number | WP173 |
| Time | 2012-02-14 |
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