دانلود رایگان مقاله شکست یا موفقیت سیاست؟ تشخیص شکست بازار در بازار مسکن چین

ABSTRACT

Due to a high vacancy rate of residential homes, housing prices remain sticky in most urban areas of China, which causes higher searching and bargaining costs. With an inefficient outcome, deadweight loss and market failure arises. To assess the Chinese government’s housing policies in 2010, we develop a dynamic equilibrium model, in which we demonstrate how the sticky price results in market failure. We apply a multiple-factor panel data model to show that a high degree of market failure is associated with a high ratio of persistent components in the gap between price and equilibrium. As the persistent components will cause the market’s instability, we can use the ratio between persistent and mean reverting components as an indicator to supervise the status of the housing market. We investigate the new and second-hand markets in 19 major cities, including 4 municipalities and 15 vice-provincial cities. Through our multiple-factor model, we explore the situation for each city. The results indicate these policies did improve the housing market’s efficiency. It is therefore useful for the Chinese government to extend these policies to other areas to include not only big cities, but entire provinces which can improve its economic system efficiency and fairness even when its economic growth is slowing down.

5. Concluding remarks

This article develops a model to examine the degree of market failure, whereby our model evaluates the new and second-hand housing markets for 19 major cities in China. Considering the persistent and mean reversion characteristics concealed in the gap between price and equilibrium, we analyze panel data with a multiple factor model.

This paper illustrates that a high transaction cost will cause a high probability for market failure. Through the speed of adjustment, we measure the degree of market failure for each city. Comparing the pre- and post-policy shock periods, we discover that the large volatility components at low adjustment speeds became smaller after 2010, meaning the market became more flexible and efficient. This is more obvious on the new housing market than the second-hand market, which led the overall housing market to be more efficient. We examine 19 major cities that rank equal to or higher than the vice-provincial level. Eighteen new house markets have degrees of market failure that are associated with the ratios of the persistent part decreasing. This is illustrated by changes in four municipalities: Beijing’s persistent part ratio decreases from 0.7695 to 0.6169, Shanghai’s from 0.7397 to 0.5694, Tianjin’s from 0.8358 to 0.6696, and Chongqing’s from 0.8762 to 0.7368. This significantly demonstrates that performance improved after 2010.

According to the National Bureau of Statistics of China, the major cities’ ratios of house prices to earnings are higher than those of other countries. For example, Beijing’s ratio of house prices to earnings is 19.1, far higher than London’s 9.2. It is difficult for an averageincome Chinese resident to afford such high house prices. As housing expenditures occupy a high ratio of income, an ordinary person can hardly save any money, thus enlarging wealth inequality. We show that policies in 2010 did improve the house market’s effi- ciency, preventing housing prices from soaring and helping residents to buy houses at reasonable prices. Thus, if the Chinese government can extend these policies to other areas to include not only big cites, but also entire provinces, even if the economic growth is slowing down, these policies will make the economic system healthier.