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The Political Economy of Korean Government Policies on Real Estate

Author

Listed:
  • Chung-Ho Kim

    (Korea Centre for Free Enterprise, Do-Won Building, 290-20 Dowha-Dong, Mapo-Ku, Seoul, South Korea, kch@cfe.org)

  • Kyung-Hwan Kim

    (Department of Economics, Sogang University, C.P.O. Box 1142, Seoul, South Korea, kyungkim@ccs.sogang.ac.kr)

Abstract

This paper investigates the driving forces behind the Korean government's real-estate policy decision-making. In particular, it tries to explain why inefficient and inequitable policies have persisted for so long, and why policy reform has been so sluggish. In order to do this, a few key regulations governing housing supply and land use are described and evaluated. These are the price control on new apartments, control on land-use conversion, green belts and spatial deconcentration policies. Next, it is demonstrated that the standard economic theory of interest-group politics is not appropriate in explaining the behaviour of the government officials in charge of these regulations. It is then suggested that a piecemeal and lukewarm approach to policy reform could be better understood in light of the behaviour of risk-averse government officials taking the political ramifications of their decisions very seriously.

Suggested Citation

  • Chung-Ho Kim & Kyung-Hwan Kim, 2000. "The Political Economy of Korean Government Policies on Real Estate," Urban Studies, Urban Studies Journal Limited, vol. 37(7), pages 1157-1169, June.
    • Handle: RePEc:sae:urbstu:v:37:y:2000:i:7:p:1157-1169
    DOI: 10.1080/00420980020080071
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    References listed on IDEAS

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    1. Kim, Kyung-Hwan, 1993. "Housing Prices, Affordability, and Government Policy in Korea," The Journal of Real Estate Finance and Economics, Springer, vol. 6(1), pages 55-71, January.
    2. Karl E. Case & Robert J. Shiller, 1988. "The behavior of home buyers in boom and post-boom markets," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 29-46.
    3. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    4. Son, Jae-Young & Kim, Kyung-Hwan, 1998. "Analysis of Urban Land Shortages: The Case of Korean Cities," Journal of Urban Economics, Elsevier, vol. 43(3), pages 362-384, May.
    5. Green, Richard K. & Malpezzi, Stephen & Vandell, Kerry, 1994. "Urban Regulations and the Price of Land and Housing in Korea," Journal of Housing Economics, Elsevier, vol. 3(4), pages 330-356, December.
    6. Stigler, George J, 1970. "Director's Law of Public Income Redistribution," Journal of Law and Economics, University of Chicago Press, vol. 13(1), pages 1-10, April.
    7. Kau, James B & Rubin, Paul H, 1979. "Self-Interest, Ideology, and Logrolling in Congressional Voting," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 365-384, October.
    8. Bertaud, Alain & Renaud, Bertrand, 1997. "Socialist Cities without Land Markets," Journal of Urban Economics, Elsevier, vol. 41(1), pages 137-151, January.
    9. Chung-Ho Kim & Kyung-Hwan Kim, 1999. "Expectation and Housing Price Dynamics Following Deregulation in Korea," International Real Estate Review, Global Social Science Institute, vol. 2(1), pages 126-142.
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    Cited by:

    1. Woongkyoo Bae & UnHyo Kim & Jeongwoo Lee, 2019. "Evaluation of the Criteria for Designating Maintenance Districts in Low-Rise Residential Areas: Urban Renewal Projects in Seoul," Sustainability, MDPI, vol. 11(21), pages 1-20, October.
    2. Kim, Kyung-Hwan & Park, Miseon, 2016. "Housing Policy in the Republic of Korea," ADBI Working Papers 570, Asian Development Bank Institute.
    3. Kyungwon Kim & Jae Wook Song, 2018. "Managing Bubbles in the Korean Real Estate Market: A Real Options Framework," Sustainability, MDPI, vol. 10(8), pages 1-25, August.
    4. Richard K. Green & Susan M. Wachter, 2007. "The housing finance revolution," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 21-67.
    5. Kyung-Hwan Kim & Miseon Park, 2016. "Housing Policy in the Republic of Korea," Working Papers id:10751, eSocialSciences.

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