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Redirecting or reducing demand? the efficacy of Chinese government efforts to control the housing market Yang, Yang


This paper examines the success of Chinese government policies in restricting housing market activity. The focus is whether policies designed to restrict speculation and cool the higher end of the housing market, succeeded in doing so, and if successful, did they result in an overall reduction in activity. The particular government interventions we examine are the restrictions on lending imposed from late 2010 to early 2011 that targeted the higher end market by only affecting units over 90 square meters in size. As well as targeting only one segment of the market, these policies were not implemented uniformly across cities. Our identification strategy is to exploit the differential restrictions across unit size to assess the effects of these policies on overall activity, the targeted high-end market, and housing sub-markets less affected by restrictions. The empirical analysis uses a panel data from nine Chinese cities that aggregates activity by sub-markets from 2006Q1 to 2013Q4. The detail in the data allow us to look at relative activity by housing sub-market within individual cities, the difference that we exploit to identify the effects of the government restrictions.

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Attribution-NonCommercial-NoDerivs 2.5 Canada