We investigate what determines China's housing price dynamics using a DSGE-VAR estimated with priors allowing for the featured operating of normal and "shadow" banks in China, with data observed between 2001 and 2014. We find that the housing demand shock, which is the essential factor for...

We revisit the determinants of house prices in Chinaís megacities. Previous work on similar topics fails to account for the widespread cross-sectional heterogeneity and interdependencies, despite the importance of them. Using a PVAR estimated by the Bayesian method allowing for these features,...