Economics and management of national economy

Influence of Government spending on the house prices in Vietnam

Economic Annals-XXI

Economic Annals-ХХI: Volume 162, Issue 11-12, Pages: 53-55

Citation information:
Thai, Pham Huu Hong (2016). Influence of Government spending on the house prices in Vietnam. Economic Annals-XXI, 162(11-12), 53-55. doi: https://doi.org/10.21003/ea.V162-11

Pham Huu Hong Thai
Ph.D (Economiccs & Finance),
Associtate Professor,
University of Finance – Marketing,
2/4 Tran Xuan Soan, Phuong Tan Thuan Tay, Quan 7, Ho Chi Minh City, Vietnam
phh.thai@ufm.edu.vn
ORCID ID: http://orcid.org/0000-0003-1262-6492

Influence of Government spending on the house prices in Vietnam

Abstract. This study investigates for the first time whether government spending is an important driving force of a recent increase in housing price in Vietnam. Using a Vector Autoregressive Model approach with a unique quarterly dataset of the 2011-2015 period from two biggest and most important cities of Vietnam (Hanoi and Ho Chi Minh), the results show that an increase in expenditure for investment instead of the recurrent expenditure or other government spendings pulls up housing price. On the one hand, the findings may reflect that households in the investment projects’ areas may be willing to pay for an increase in public spending through taxes and fees. On the other hand, the results may suggest that one of the solutions curbing housing price inflation is to limit government spending in new streets, new infrastructure, and building improvements.

Keywords: Housing price; Public Spending; VECM; Vietnam

JEL Classification: R21; R31; H27; G10

Acknowledgment. This research is funded by Vietnam National Foundation for Science and Technology Development (NAFOSTED) under grant number II5.3-2013.03.

DOI: https://doi.org/10.21003/ea.V162-11

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Received 8.10.2016

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