02269cas a2200253 a 4500 AALejournalIMF021339 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513561639 1018-5941 BD-DhAAL BD-DhAAL Bayoumi, Tamim. Incomplete Financial Markets and the Booming Housing Sector in China / Tamim Bayoumi, Yunhui Zhao. Washington, D.C. : International Monetary Fund, 2020. 1 online resource (32 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Housing is by far the most important asset in Chinese households' balance sheets. However, despite forceful and frequent government interventions, the rise in Chinese housing prices has not been contained as much as intended, a trend that has not been reversed by the COVID-19 shock. In this paper, we first provide some stylized facts and then a DSGE model (encompassing both demand and supply channels) to highlight the impact of a 'slow-moving' structural vulnerability-financial market incompleteness-on China's housing prices. The model implies that to eradicate the root causes of the rising housing price, policymakers need to go beyond the housing market itself; instead, it would be desirable to deepen financial markets because these markets would help channel financial resources to productive sectors rather than to housing speculation. This is particularly important in the COVID era because without addressing this structural vulnerability, the higher household savings and the government stimulus may fuel the housing bubble and sow seeds for a future crisis. The paper can also shed light on the housing markets in other economies that face similar vulnerabilities. Mode of access: Internet Zhao, Yunhui. IMF Working Papers; Working Paper ; No. 2020/265 Full text available on IMF http://elibrary.imf.org/view/journals/001/2020/265/001.2020.issue-265-en.xml IMF e-Library