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| Sainan Jin, Wanjun Jiang, Liangjun Su and Jianying Hu |
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| ''The Rise in House Prices in China: Bubbles or Fundamentals?'' |
| ( 2006, Vol. 3 No.7 ) |
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| The dramatic rise of house prices in many cities of China has brought huge attention from both the governmental and academic circles. There is a huge debate on whether the increasing house prices are driven by market fundamentals or just by speculation. Like Levin and Wright (1997a, 1997b), we decompose house prices in China into fundamental and non-fundamental components. We also consider potential nonlinear feedback from the historical growth rate of house prices on the current house prices and propose a semiparametric approach to estimate the speculative components in the model. We demonstrate that the non-fundamental part contributes a relatively small proportion of the rise of house prices in China. |
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| Keywords: |
JEL: C2 - Single Equation Models; Single Variables: General
C5 - Econometric Modeling: General |
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| Manuscript Received : Mar 20 2006 | | Manuscript Accepted : Mar 28 2006 |
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