IDEAS home Printed from https://ideas.repec.org/a/spt/apfiba/v10y2020i4f10_4_2.html
   My bibliography  Save this article

The Impact of Economic Policy Uncertainty on Real Estate Development in China

Author

Listed:
  • Miao Li
  • Gaoqiang Wu

Abstract

This paper analyzes the impact of economic policy uncertainty on real estate development at the macro level in China. Using the Economic Policy Uncertainty (EPU) Index released by Baker et al. (2016), we find that EPU has a leading and negative effect on real estate development investment. And there is a positive relationship between EPU innovations and the growth rate of real estate development investment. Moreover, the restraining effect of EPU is more pronounced in the state-owned enterprises’ investment and the part of construction and installation investment. Based on the empirical evidences, we suggest that government should pay attention to the negative impact of economic policy uncertainty and maintain consistency and stability of economic policies.  JEL classification numbers: D81, R31, R38, G31

Suggested Citation

  • Miao Li & Gaoqiang Wu, 2020. "The Impact of Economic Policy Uncertainty on Real Estate Development in China," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 10(4), pages 1-2.
    • Handle: RePEc:spt:apfiba:v:10:y:2020:i:4:f:10_4_2
    as

    Download full text from publisher

    File URL: http://www.scienpress.com/Upload/JAFB%2fVol%2010_4_2.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Wu, Jing & Gyourko, Joseph & Deng, Yongheng, 2016. "Evaluating the risk of Chinese housing markets: What we know and what we need to know," China Economic Review, Elsevier, vol. 39(C), pages 91-114.
    2. Goodness Aye, 2018. "Causality between Economic Policy Uncertainty and Real Housing Returns in Emerging Economies: A Cross-Sample Validation Approach," Working Papers 201827, University of Pretoria, Department of Economics.
    3. Wang, Yizhong & Chen, Carl R. & Huang, Ying Sophie, 2014. "Economic policy uncertainty and corporate investment: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 26(C), pages 227-243.
    4. Scott R. Baker & Nicholas Bloom & Steven J. Davis, 2016. "Measuring Economic Policy Uncertainty," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(4), pages 1593-1636.
    5. Jonathan Brogaard & Andrew Detzel, 2015. "The Asset-Pricing Implications of Government Economic Policy Uncertainty," Management Science, INFORMS, vol. 61(1), pages 3-18, January.
    6. Davis, Morris A. & Van Nieuwerburgh, Stijn, 2015. "Housing, Finance, and the Macroeconomy," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 753-811, Elsevier.
    7. Titman, Sheridan, 1985. "Urban Land Prices under Uncertainty," American Economic Review, American Economic Association, vol. 75(3), pages 505-514, June.
    8. Goodness C. Aye, 2018. "Causality between economic policy uncertainty and real housing returns in emerging economies: A cross-sample validation approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 6(1), pages 1473708-147, January.
    9. David Su & Xin Li & Oana-Ramona Lobonþ & Yanping Zhao, 2016. "Economic policy uncertainty and housing returns in Germany: Evidence from a bootstrap rolling window," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 34(1), pages 43-61.
    10. Quigg, Laura, 1993. "Empirical Testing of Real Option-Pricing Models," Journal of Finance, American Finance Association, vol. 48(2), pages 621-640, June.
    11. Jie Zhang & Jianhua Wang & Aiyong Zhu, 2012. "The relationship between real estate investment and economic growth in China: a threshold effect," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 48(1), pages 123-134, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ouyang, Zisheng & Zhou, Xuewei & Wang, Gang-jin & Liu, Shuwen & Lu, Min, 2024. "Multilayer networks in the frequency domain: Measuring volatility connectedness among Chinese financial institutions," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 909-928.
    2. Whelsy Boungou & Charles Mawusi, 2021. "Economic Policy Uncertainty and Banks' Interest Income: Empirical Evidence from an International Panel Dataset," Economics Bulletin, AccessEcon, vol. 41(3), pages 2003-2011.
    3. Jin, Ming & Yin, Mingmei & Chen, Zhongfei, 2021. "Do investors prefer borrowers from high level of trust cities? Evidence from China’s P2P market," Research in International Business and Finance, Elsevier, vol. 58(C).
    4. Caporale, Guglielmo Maria & Kyriacou, Kyriacos & Spagnolo, Nicola, 2023. "Aggregate insider trading and stock market volatility in the UK," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 89(C).
    5. Kyriaki I. Kafka, 2024. "Under the Veil of Uncertainty: Assessing the Greek Economy’s Resilience and Vulnerability in the Face of Different Uncertainty Types," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 9288-9321, June.
    6. Jieqiong Yang & Panzhu Luo & Yong Tan, 2020. "Contingent Decision of Corporate Environmental Responsibility Based on Uncertain Economic Policy," Sustainability, MDPI, vol. 12(21), pages 1-18, October.
    7. Haining Chen & Prince Asare Vitenu-Sackey & Isaac Akpemah Bathuure, 2024. "Uncertainty Measures and Business Cycles: Evidence From the US," SAGE Open, , vol. 14(2), pages 21582440241, April.
    8. Wang, Hao & Xu, Ning & Yin, Haiyan & Ji, Hao, 2022. "The dynamic impact of monetary policy on financial stability in China after crises," Pacific-Basin Finance Journal, Elsevier, vol. 75(C).
    9. Deng, Chuang & Zhao, Xiuyi & Xu, Man, 2022. "Financial cycle and the effect of monetary policy," Finance Research Letters, Elsevier, vol. 47(PA).
    10. Batabyal, Sourav & Killins, Robert, 2021. "Economic policy uncertainty and stock market returns: Evidence from Canada," The Journal of Economic Asymmetries, Elsevier, vol. 24(C).
    11. Al-Haschimi, Alexander & Apostolou, Apostolos & Azqueta-Gavaldon, Andres & Ricci, Martino, 2023. "Using machine learning to measure financial risk in China," Working Paper Series 2767, European Central Bank.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Huang, Wei-Ling & Lin, Wen-Yuan & Ning, Shao-Lin, 2020. "The effect of economic policy uncertainty on China’s housing market," The North American Journal of Economics and Finance, Elsevier, vol. 54(C).
    2. Xia, Tongshui & Yao, Chen-Xi & Geng, Jiang-Bo, 2020. "Dynamic and frequency-domain spillover among economic policy uncertainty, stock and housing markets in China," International Review of Financial Analysis, Elsevier, vol. 67(C).
    3. Yilanci, Veli & Kilci, Esra N., 2021. "The role of economic policy uncertainty and geopolitical risk in predicting prices of precious metals: Evidence from a time-varying bootstrap causality test," Resources Policy, Elsevier, vol. 72(C).
    4. Azimli, Asil, 2022. "The impact of policy, political and economic uncertainty on corporate capital investment in the emerging markets of Eastern Europe and Turkey," Economic Systems, Elsevier, vol. 46(2).
    5. Oguzhan Cepni & Hardik A. Marfatia & Rangan Gupta, 2021. "The Time-Varying Impact of Uncertainty Shocks on the Comovement of Regional Housing Prices of the United Kingdom," Working Papers 202168, University of Pretoria, Department of Economics.
    6. Gizem Uzuner & Sudeshna Ghosh, 2021. "Do pandemics have an asymmetric effect on tourism in Italy?," Quality & Quantity: International Journal of Methodology, Springer, vol. 55(5), pages 1561-1579, October.
    7. Kyriaki I. Kafka, 2024. "Under the Veil of Uncertainty: Assessing the Greek Economy’s Resilience and Vulnerability in the Face of Different Uncertainty Types," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 9288-9321, June.
    8. Assaf, Ata & Charif, Husni & Mokni, Khaled, 2021. "Dynamic connectedness between uncertainty and energy markets: Do investor sentiments matter?," Resources Policy, Elsevier, vol. 72(C).
    9. Aye, Goodness C. & Kotur, Lydia N., 2022. "Effect of economic policy uncertainty on agricultural growth in Nigeria," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 17(2), June.
    10. Cem Işık & Ercan Sirakaya-Turk & Serdar Ongan, 2020. "Testing the efficacy of the economic policy uncertainty index on tourism demand in USMCA: Theory and evidence," Tourism Economics, , vol. 26(8), pages 1344-1357, December.
    11. Oluwatomisin J. Oyewole & Idowu A. Adubiagbe & Oluwasegun B. Adekoya, 2022. "Economic policy uncertainty and stock returns among OPEC members: evidence from feasible quasi-generalized least squares," Future Business Journal, Springer, vol. 8(1), pages 1-10, December.
    12. Li, Xiao-Ming, 2017. "New evidence on economic policy uncertainty and equity premium," Pacific-Basin Finance Journal, Elsevier, vol. 46(PA), pages 41-56.
    13. Shahzad, Syed Jawad Hussain & Raza, Naveed & Balcilar, Mehmet & Ali, Sajid & Shahbaz, Muhammad, 2017. "Can economic policy uncertainty and investors sentiment predict commodities returns and volatility?," Resources Policy, Elsevier, vol. 53(C), pages 208-218.
    14. Das, Debojyoti & Kannadhasan, M. & Bhattacharyya, Malay, 2019. "Do the emerging stock markets react to international economic policy uncertainty, geopolitical risk and financial stress alike?," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 1-19.
    15. Hoang, Dung Phuong & Chu, Lan Khanh & To, Trung Thanh, 2023. "How do economic policy uncertainty, geopolitical risk, and natural resources rents affect economic complexity? Evidence from advanced and emerging market economies," Resources Policy, Elsevier, vol. 85(PA).
    16. Jun Wen & Samia Khalid & Hamid Mahmood & Xiuyun Yang, 2022. "Economic policy uncertainty and growth nexus in Pakistan: a new evidence using NARDL model," Economic Change and Restructuring, Springer, vol. 55(3), pages 1701-1715, August.
    17. Shabir Mohsin Hashmi & Muhammad Akram Gilal & Wing-Keung Wong, 2021. "Sustainability of Global Economic Policy and Stock Market Returns in Indonesia," Sustainability, MDPI, vol. 13(10), pages 1-18, May.
    18. Mohsen Bahmani‐Oskooee & Mehrnoosh Hasanzade, 2022. "Policy uncertainty and income distribution: Asymmetric evidence from state‐level data in the United States," Bulletin of Economic Research, Wiley Blackwell, vol. 74(1), pages 179-220, January.
    19. Mohsen Bahmani-Oskooee & Sujata Saha, 2019. "On the effects of policy uncertainty on stock prices," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 43(4), pages 764-778, October.
    20. Afees A. Salisu & Rangan Gupta & Ahamuefula E. Ogbonna & Mark E. Wohar, 2022. "Uncertainty and predictability of real housing returns in the United Kingdom: A regional analysis," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 41(7), pages 1525-1556, November.

    More about this item

    Keywords

    Economic policy uncertainty; Real estate development; Real option theory;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spt:apfiba:v:10:y:2020:i:4:f:10_4_2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Eleftherios Spyromitros-Xioufis (email available below). General contact details of provider: http://www.scienpress.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.