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An Analysis of the Interaction Between Economic Growth and Real Estate Investment in Hong Kong (1973-99)

An Analysis of the Interaction Between Economic Growth and Real Estate Investment in Hong Kong (1973-99)


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About the Book

This dissertation, "An Analysis of the Interaction Between Economic Growth and Real Estate Investment in Hong Kong (1973-99)" by Gaolu, Zou, 鄒高祿, was obtained from The University of Hong Kong (Pokfulam, Hong Kong) and is being sold pursuant to Creative Commons: Attribution 3.0 Hong Kong License. The content of this dissertation has not been altered in any way. We have altered the formatting in order to facilitate the ease of printing and reading of the dissertation. All rights not granted by the above license are retained by the author. Abstract: -A- Abstract Abstract This study examines the interactions between economic growth and real estate investment in the Hong Kong Special Economic Region (HKSAR). Recent studies in the US suggest that residential investment leads Gross Domestic Product (GDP), while non-residential investment lags behind GDP. Therefore, it has been suggested that the housing construction cycle leads the business cycle. An analysis of the data in Hong Kong suggests that total investment in housing lags behind GDP, which seems to contradict previous studies. In Hong Kong, public housing is a significant component of the housing sector. More than 40% of the population lives in public housing. A different picture emerges when total investment in housing is disaggregated into private and public components. The results of this study suggest that private housing investment leads GDP, while public residential investment lags behind GDP. This suggests that private -A- -B- Abstract housing investment is a good predictor of economic growth. This result also suggests that any policy that results in diverting funds away from the private residential market is likely to cause a recession. The fact that public sector housing investment lags behind the economy suggests that the government's public housing policy has been reactive rather than proactive. This is in line with the HKSAR government's conservative fiscal policy, which aims to maintain a balanced budget. Since an increase in investment in public housing will crowd out private sector housing investment, it would be unwise to stimulate the economy by investing in public housing, although it may be convenient for the government to do so. The data from the HKSAR also shows that non-residential investment has been lagging behind GDP. This is consistent with results in previous studies. Non-residential investment as a lagging indicator is further confirmed with data from the HKSAR. -B- -C- Abstract One of the major differences between the findings in this study and those in other studies is that of the long-run equilibrium relationship between real estate investments and aggregate demand. We have shown that real estate investments do not necessarily have a long-run equilibrium relationship with GDP. In contrast to previous studies, we found that both private residential and non-residential investments do not have a long-run equilibrium relationship with GDP. As for non-residential investment, this could be explained by the major economic restructuring that has taken place in China since it adopted its open door economic policy in 1979. The relocation of the production base (for both goods and services) from the HKSAR to the Pearl River Delta has resulted in a declining demand for non-residential buildings in the long run. As for private residential investment, the Sino-British agreement that restricted land supply from 1983-1997 prohibited the formation of a long-run -C- -D- Abstract equilibrium relationship between private housing investment and economic growth. On the other hand, public housing investment does have a long-run equilibrium relationship with GDP, which further confirms the conservative fiscal policy adopted by the government and the reactive nature of the HKSAR's public housing policy. The results obtained in this study are very significant and robust in that they are consistent under a wide range of time-series specificatio


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Product Details
  • ISBN-13: 9781361404645
  • Publisher: Open Dissertation Press
  • Publisher Imprint: Open Dissertation Press
  • Height: 279 mm
  • No of Pages: 206
  • Weight: 767 gr
  • ISBN-10: 1361404647
  • Publisher Date: 27 Jan 2017
  • Binding: Hardback
  • Language: English
  • Spine Width: 13 mm
  • Width: 216 mm


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