Journal
ECONOMIC MODELLING
Volume 46, Issue -, Pages 225-237Publisher
ELSEVIER
DOI: 10.1016/j.econmod.2014.12.033
Keywords
Land financing; Government spending; DSGE model; China
Categories
Funding
- Pujiang Program [13PJC026]
- National Natural Science Foundation of China [71303078]
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In the past decade, the Chinese government was increasingly relying on revenues from land sales to finance the public spending. This paper examines the impacts of land financing on business cycle fluctuations in China in an estimated DSGE model. The simulation results indicate that the overall effect of land financing is to increase the business cycle fluctuations by 12.6%. However, the impacts of land financing on business cycle fluctuations depend on shocks hitting the economy. The policy implication of this paper is that cutting the direct linkage between the government expenditure and the land sales could mitigate the business cycle fluctuations. (c) 2014 Elsevier B.V. All rights reserved.
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