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Demographic Shock, Marriage and the Housing Market

Nankai Economic Studies[ISSN:1001-4691/CN:12-1028/F]

Issue:
2016 01
Page:
58-76
Research Field:
Publishing date:

Info

Title:
Demographic Shock, Marriage and the Housing Market
Author(s):
Liu XueliangWu Jing Deng Yongheng
Institute of Economics, Chinese Academy of Social Sciences;Institute of Real Estate Studies, Tsinghua University;Institute of Real Estate Studies, National University of Singapore
Keywords:
Marriage Baby Boom Housing Market Housing Price
PACS:
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DOI:
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Abstract:
The persistent and rapidgrowth of housing price is one of the most important social economic challengesfaced in China in recent years . This paper investigates this phenomenon from the demography perspective . We propose apartial equilibrium theoretical model of housing market based on the household lifecycle consumptionframeworkand aCournot type of monopolistic competition model . Our new model suggests a positive effect of exogenous fertility rate shock on housing demand and then house price. This hypothesis is also supported by the empirical test using a panel data of 30 Chinese provinces . We findthat the housing demand from new marriages of the baby boomers from the 80’s is one of the significant factors contributing to the housing price surge after 2004. It is also evidenced that such demographic driven housing boom is highly cyclical; as a result, when the surge of demand from demographic shock comes to an end, we may encounter a contraction of housing demand, and a shock on macroeconomic stability

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Last Update: 2016-02-26