Property Price and Local Government Revenue in China: An Empirical Investigation

Kunyuan Qiao


By investigating the panel data of "Seventy Upper Middle Cities" in China from Year 1997 to 2009, this paper discovers the relationship between property price and local government fiscal revenue with an empirical model, confirms the nexus through investigating the robustness of the model, and ensures the causality via the instrumental variable estimation: A one percent change in house price could result in about 10% change in local fiscal revenue. Besides, this paper proposes that it is the abandonment of welfare-oriented public housing distribution system that ties up the house price and local fiscal revenue through the discovery of interaction term of policy dummy and property price: the association between real estate market and scal revenue becomes signi cant after the abandonment of
welfare-oriented public housing distribution system, and 1% change of house price could
result in 18.9% change in local fiscal revenue on average.


Local Fiscal Revenue; Instrumental Variable Estimation;

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