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ID112719
Title ProperHousing prices and the high Chinese saving rate puzzle
LanguageENG
AuthorWang, Xin ;  Wen, Yi
Publication2012.
Summary / Abstract (Note)China's over 25% aggregate household saving rate is one of the highest in the world. One popular view attributes the high saving rate to fast-rising housing prices in China. However, cross-sectional data do not show a significant relationship between housing prices and household saving rates. This article uses a simple consumption-saving model to explain why rising housing prices per se cannot explain China's high household saving rate. Although borrowing constraints and demographic changes can translate housing prices to the aggregate saving rate, quantitative simulations of our model using Chinese time-series data on household income, housing prices, and demographics indicate that rising mortgage costs can increase the aggregate saving rate by at most 2 to 4 percentage points in the best down-payment structure.
`In' analytical NoteChina Economic Review Vol. 23, No.2; Jun 2012: p.265-283
Journal SourceChina Economic Review Vol. 23, No.2; Jun 2012: p.265-283
Key WordsChinese Economy ;  Housing ;  Saving Rate ;  Borrowing Constraints ;  Housing Reform