China’s Housing Market and Macroeconomy
Paper Session
Sunday, Jan. 5, 2025 10:15 AM - 12:15 PM (PST)
- Chair: Kaiji Chen, Emory University
The Effect of House Prices on Fertility: Evidence from House Purchase Restrictions
Abstract
We assess the causal effect of house prices on the great birth rate decline in Chinafrom 2016 onward, and on the country’s marriage market and private educational investments.
Quasi-experimental increase in house prices, driven by the capital spillovers of house purchase restrictions in large cities to nearby unregulated cities, significantly reduced the birth rate in these cities. In the microdata, the individual-level effects are concentrated among rural people who do not own urban homes, especially when rural schools are spatially scarce. Both the marriage and the within-marriage margins contribute to the fertility effects. Private educational investments on children increased after the house price shock. A back-of-the-envelope calculation suggests that the positive house price shock account for a non-negligible share of the aggregate birth decline.
The Financial Spillover Effects of Real Estate
Abstract
We examine the spillover effects of the ``Three-Red Lines" policy, a Chinese regulatory measure in 2020 that imposed leverage reduction requirements on the real estate sector. Using a firm-level exposure measure, we find that higher exposure to the real estate sector leads to more pronounced adverse impacts on firms' financing costs and real economic activities. Moreover, these spillover effects transmit through the production network, affecting both upstream and downstream sectors closely connected to real estate. Notably, trade credit plays a significant role in explaining these observed spillover effects.Local Government Debt and Bank Credit Allocation: Evidence From China
Abstract
In 2015, China implemented a debt-to-bond swap program that required local governments to replace outstanding debts by local government bonds, which are considered low-risk assets for commercial banks under Basel III regulations. We study the empirical effects of the debt-swap program on bank lending, using confidential loan level data from one of China’s “Big Five” commercial banks, combined with province level government debt data and firm-level balance sheet data in China’s manufacturing sector. Consistent with theory, we obtain robust evidence that the implementation of the debt-swap program significantly reduced credit spreads on loans to privately owned firms relative to state-owned enterprises (SOEs), and the reductions in credit spreads are significantly larger in provinces with more outstanding government debt.Discussant(s)
Yu Zhang
,
Peking University
Kaiji Chen
,
Emory University
Zhiwei Xu
,
Fudan University
Jiayin Hu
,
CCER and Peking University
JEL Classifications
- E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit
- R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location