Housing Wealth and Consumption in the Chinese Urban Economy: Evidence from Micro-data

Being able to understand how housing wealth affects consumption behavior is very important to a developing economy. Particularly, the Chinese residential real estate market is especially hard to manage given the country’s large population base and rapid urbanization rate. Some previous researches have been done in this area using macro-data of China and found a small but positive housing wealth effect. In the present thesis, I question the use of macro-data and attempt to reexamine the urban housing wealth effect using micro-data obtained from an individually conducted household survey in Beijing. This paper provides a new methodology in testing the wealth effect. At the same time, my regression analyses suggest the possibility of a positive housing wealth elasticity of consumption among those who are in a long position in their housing consumption. Overall, the research paper provides a platform on which further studies of the Chinese urban housing wealth effect can unfold.