Abstract
ABSTRACT By developing a multi-sector general equilibrium model, this article investigates the nonlinear relationship between indemnificatory housing supply (IHS) and housing prices in China. Utilizing panel data from 31 provinces from 2009 to 2019, we find that the overall effect of IHS on housing prices is negative at the current stage. However, as the IHS expands, this effect transitions from negative to positive, exhibiting a U-shaped relationship driven by a stable demand-shifting effect and an increasingly dominant supply-crowding-out effect. Furthermore, fiscal decentralization exhibits a nonlinear moderating effect, first strengthening and then weakening the effect of IHS on lowering housing prices. Our findings demonstrate the relationship between IHS and housing prices from a nonlinear perspective, highlight the critical role of fiscal decentralization, and provide policy insights for promoting economic growth and improving social welfare.
Published Version
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