Study on the Impact of Local Public Expenditure on Housing Price—An Empirical Analysis Based on Provincial Panel Data

Abstract

Based on the discussion about transmission mechanism of local public expenditure on housing price under different housing market types, the paper performs an empirical study on the influence of various public expenditures on housing price by using Chinese panel data of provinces from 2007 to 2015. According to the result, public education expenditure and public transportation expenditure have prominent capitalization effect on housing price. Among the expansions of various local public expenditures, public education expenditure is the most effective type to promote the capitalization of commercial housing. In dynamic panel test, the capitalization effect of public expenditure maintains significant after the introduction of consumer expectation, which is consistent with the regression result of static panel. At last, the paper puts forward some relevant policy suggestions for the government to optimize the structure of public expenditure, guide consumer expectations reasonably and promote the sound development of real estate market.