- Government Policy and Land Price Dynamics: A Quantitative Assessment of China's Factor Market
- Vipul Bhatt, Mouhua Liao, Min Qiang Zhao
- 2433 20190703 () Views:24209
- This paper examines the role played by government policy regarding factors of pro-
duction in shaping the dynamics of a growing economy. Using land as an example
of an important productive factor, we develop a quantitative model with endogenous
land price policy regimes to rationalize the following three economic reforms in China:
introduction of non-SOEs (state-owned enterprises); reform of SOEs characterized by
their retreat from the competitive manufacturing sector and the establishment of state
monopolies in factor markets around 2000; and a regime switch from dual-track land
pricing to land price discrimination by use. We calibrate our model to key economic
indicators for China and quantify the eects of these reforms. Our calibrated mo-
del can match several stylized facts for China after 2000 such as widening disparity
in land prices by use, rapid growth in housing price, land revenue, and government
expenditures on public goods, and the steep decline in labor share for income.
- JEL-Codes: Q15, R38, H71, E25, O18.
- Keywords: Dual-track Pricing, Land Price Discrimination, State Monopoly, Land Market Reforms.
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