What Can an Open-Economy DSGE Model Tell Us about Hong Kong’s Housing Market?

This paper develops an open-economy DSGE model with a housing-market sector and a borrowing constraint. Contrary to standard conventions, domestic households are allowed to invest in foreign housing and vice versa. Using Bayesian methods, the model is applied to data for Hong Kong. The results show that Hong Kong’s housing market is quite open to foreign investment, and perhaps more significantly, that variations in the loan-to-value ratio and housing preference shocks largely explain business cycle volatility.DSGE models; housing; open economy; Hong Kong

Dundee Discussion Papers in Economics 220:China's new labour contract law: no harm to employment?

In January 2008, China imposed a new labour contract law. This new law is the most significant reform to the law of employment relations in mainland China in more than a decade. The paper provides a theoretical framework on the inter-linkages between labour market regulation, option value and the choice and timing of employment. All in all, the paper demonstrates that the Labour Contract Law in it´s own right will have only small impacts upon employment in the fast-growing Chinese economy. On the contrary, induced increasing unit labour costs represent the real issue and may reduce employment

Macroeconomic Shocks in Euroland vs. the UK: Supply, Demand, or Nominal?

currency; economic integration; EMU; Euro; European Central Bank; political economy; U.K.

Taking the temperature – forecasting GDP growth for mainland China

We present a new composite leading indicator of economic activity in mainland China, es-timated using a dynamic factor model. Our leading indicator is constructed from three se-ries: exports, a real estate climate index, and the Shanghai Stock Exchange index. These series are found to share a common, unobservable element from which our indicator can be identified. This indicator is then incorporated into out-of-sample one-step-ahead forecasts of Chinese GDP growth. Recursive out-of-sample accuracy tests indicate that the small-scale factor model approach leads to a successful representation of the sample data and provides an appropriate tool for forecasting Chinese business conditions.forecasting; China; leading indicator; factor model; growth cycles

The emergence and spatial distribution of Chinese seaport cities

Seaports have historically played a key role in facilitating trade and growth. This paper is the first attempt in the literature to analyse the formation of Chinese seaport cities and the dynamics that drives it. First, we aim to identify theoretically the emergence of urbanized seaports with the help of a formal economic geography model. Second, employing an empirically plausible parameterisation of the model, we calibrate the evolutionary process and spatial distribution of seaports along the Chinese coastline.seaports; cities; economic growth; China