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The Threshold Effect about Housing Price Rise on Residents'Consumption: Inverted U Hypothesis and Empirical
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TitleThe Threshold Effect about Housing Price Rise on Residents'Consumption: Inverted U Hypothesis and Empirical  
AuthorLi Chunfeng and Liu Jianjiang  
OrganizationSchool of Economics & Trade, Hunan University; School of economics & Management, Changsha University of Science & Technology 
Key WordsHouse Price Rise; Inverted U Curve Characteristics; Threshold Effect; Instrument Variable Estimation of Threshold Model 
AbstractBased on the double effect trend of graphics about house price affect consumption, the paper puts forward house price influencing consumption exists threshold effect, House price rising modestly promotes wealth appreciation, boosts consumption confidence; Price rising excessively fast brings huge pressure, causes current consumption to reduce. By structuring a dynamic threshold model we confirm the threshold effect of house price on urban residents' consumption. Result shown that: if house price rises less than 13.31%, the impact of house price rising on consumption is dominated by the wealth effect, with the increasing of house price the effect size shown inverted u-shaped curve characteristic, the overall wealth effect reaches the maximum on the critical value 6.55%, if the margin of house price rising is greater than 13.31%, the overall effect appears crowding out effect with house price rising further more obvious effect. Combining empirical research with the real situation, to make real estate play positive role in consumption even in economic growth, the current should be focus on controlling house price rise at a reasonable level. 
Serial NumberWP515 
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