摘要Aggregate and Distributional Impacts of Housing Policy: China's Experiment

题目:Aggregate and Distributional Impacts of Housing Policy: China's Experiment





Kaiji Chen is currently a tenured associate professor at Emory University and a senior research fellow of Federal Reserve Bank of Atlanta. His main research fields are macroeconomics and financial economics. He has published in top economic journals, such as American Economic Review, NBER Macroeconomic Annual, American Economic Journal: Macroeconomy, and Journal of Monetary Economics. In recent years, his research has focused on China’s macroeconomy, especially its interaction with financial markets and monetary policy. His research topics include Chinese housing bubbles, shadow banking and monetary policies, and trends and cycles in China’s macroeconomy. As the principal investigator, he was awarded in 2016 National Science Foundation (NSF) grant for his research project “Quantifying the Interactions between the Financial Sector and the Macroeconomy in China: A structural Approach”. His paper “The Great Housing Boom of China,” was awarded the 3rd Sun Yefang Financial Innovation Award in 2018.


What's the role of credit conditions in housing booms and busts and what are the distributional consequences of housing booms and busts across households of different characteristics? In this paper, we take China's recent changes in housing policy as an experiment to address these two key issues. During 2014Q4-2016Q3, China relaxed its housing policies by reducing the minimum down payment ratio of non-primary houses from 60-70 percent to 30 percent. By exploiting two unique micro-level data sets, we find that this policy change induced a significant increase in mortgage credit demand among middle-aged high-educated households, while crowding out mortgage credit to young households. Moreover, consumption growth by middle-aged high-educated households slowed down following this policy change. To quantify the aggregate and distributional impacts of this policy change, we construct an overlapping-generation economy with household heterogeneity and calibrate it to match various aggregate and cross-sectional moments of China. Our policy experiment suggests that a cut in the minimum down payment ratio for non-primary houses involves a self-enforcing effect on housing demand via equilibrium housing price: a reduction in the down payment ratio for non-primary housing triggers an initial housing price increase. This, in turn, generates capital gains for existing homeowners when the policy changes and allows them to switch to a larger or better house by overcoming the credit constraint for housing investment. Such a process is self-enforcing via the equilibrium housing prices due to the interaction between stronger housing demand and higher housing price.