Economics Case Study

The first is the rise and fall of stocks. Regarding the following principles .

1, stock rise and fall is the operation of the secondary market.

2, in short, buy more people go up, sell more people go down. (Example expression, because I just described a deviation, for example, a stock current price of 10 yuan, someone selling someone to buy 10 yuan, such as someone out of 11 yuan to buy, but no one sells, it is 11 yuan, and so on, is up, and vice versa, down)

3, personal feeling, the company's performance is good or bad on the stock is not much impact, the stock up or down is mainly dominated by the subject matter and the policy news. For example, before the Olympic Games can buy Beijing travel. Bear market when the vast majority are down, bull market, the vast majority are up. A government signal can dominate the stock market up or down.

The rise and fall of the stock has macro and fundamental reasons, the main or capital side or by the main care degree.

The second is the theory of economic recovery. The law of stock sector rotation.

The third is the law of macro-control, broken down as follows.

In today's world, whether in the West or the East, the economic operation whether the market sings the lead or the government sings the lead, all with the color of mixed economy. A pure market economy or a purely planned economy is unrealistic. Most countries are mainly market economies, and when the market fails, the government intervenes in the economy to bring it back to its original equilibrium. Real estate, whether as a consumer or investment good, occupies an important position in the national economy. Governments of all countries will, to varying degrees, carry out macro-control of the real estate market. The degree of intervention varies according to the degree of market development. In countries like the United States, where the free market economy works well, the government intervenes less in the market. And like Singapore these emerging market countries, in the market just starting stage, the government did a lot of constructive work, to be more mature market after the government gradually fade out, most of the tasks to the market to complete.

China's real estate market is in the government decided to carry out reform of the housing system, to stop welfare housing, the implementation of the commercialization of housing, monetization, socialization before the start. Real estate industry in China is still a new industry, but it is increasingly important in the national economy, is becoming China's economic development of the new pillar industries. However, due to the late start, coupled with imperfect development, China's real estate market shows more obvious ups and downs fluctuations and some other more typical characteristics of the primary market, such as the speculative atmosphere is heavier, the market operation mechanism is not standardized, the relevant laws are not sound. Under such circumstances, the government usually takes some economic, legal and administrative measures to intervene in the economy in order to improve the efficiency of economic operation. Before launching a policy, the government should first make it clear that, based on the actual situation of China's current real estate market, the goal of our government's macro-control of the real estate market should be to maintain a balanced development of the market and to provide a good external environment for the healthy and orderly development of the market, not to increase the demand for housing and to stimulate the growth of the national economy, as propagated by some media. An important point in the evaluation of government policies in economics is whether the policy can effectively improve economic efficiency and the quality of economic operation. This paper intends to China's government's current real estate macro-control policies from the perspective of economic efficiency to economic analysis, to weigh the pros and cons of its gains and losses, and on this basis to give the relevant policy recommendations.

I. Analysis of real estate industrial policy

Industrial policy is to indicate the direction of industrial development, planning industrial development goals, regulating the interrelationships between the various industries and their structure of the industrialization of the measures and means of the sum of the whole economic policy system is an important part. Its main contents are: industrial structure policy, industrial organization policy, industrial promotion and restriction policy and so on. Industrial policy has a specific guiding function for the allocation of social and economic resources, and plays a checking and stabilizing role in the process of modern economic growth that is difficult to be replaced by the market mechanism. When the government implements industrial policy, its orientation is the embodiment of industrial development goals. The basic goal of industrial development is generated under a series of constraints. At this stage, China's real estate market shows the primary market characteristics determine the real estate industrial policy goal is to improve the real estate market, give full play to the real estate industry's pillar industry function. This requires the government to adopt appropriate industrial organization policies. Industrial organization policy includes industrial competition and anti-monopoly policy, industrial union and group policy. Under the condition that the amount of input of production factors is established, the rational and effective organization of these production factors is the basic way to improve the efficiency of resource allocation. Similarly, the development of real estate, not only to formulate a reasonable total policy and structural policy, but also need to have a reasonable organization policy.

Because of the real estate has a large scale of investment, long payback period and the consequent investment risk is huge and so on, making the development of real estate industry requires the road of economies of scale. As a capital-intensive industry, the real estate industry's economies of scale are more obvious than other industries. Small scale, the developer's unit cost remains high, in advertising, marketing and promotion, environmental transformation, supporting facilities, property management and other aspects of the larger companies also have a clear advantage. In addition, large-scale, especially with strong cash strength of the developer in the choice of the best time to develop the project also has the initiative. This objectively requires the creation of a number of large-scale, strong real estate companies, which should be realized through the real estate industry within the moderate concentration of capital. Moderate capital concentration within the real estate industry, can effectively save real estate development and operating costs, moderate concentration of capital is also conducive to saving the transaction costs of the real estate market, which is achieved through the merger between enterprises, mergers and other economic mechanisms. It can be seen, through the real estate enterprise capital concentration, can optimize the real estate market organization, improve the efficiency of market operation, and optimize the scale structure of real estate enterprises.

China's current real estate market, the actual situation and the requirements of economies of scale are far from. Shanghai, for example, there are only 9 real estate companies listed on the Shanghai Stock Exchange (Shanghai local 8), selected in the SSE 30 index of real estate stocks only Lujiazui one. These 8 real estate companies in the entire Shanghai real estate industry in the size, market share, performance and many other indicators are mostly flat, in 1999 Shanghai real estate enterprises sales area, amount of 100 in the listed companies are also difficult to see. And the Hong Kong Stock Exchange real estate companies listed on more than 100, the Hang Seng Stock Index 33 sample stocks, real estate or real estate-based business of nearly half of the company. This dozen large real estate developers, market share and other major indicators to account for the entire Hong Kong real estate market of 90%, of which Cheung Kong Industries, Sun Hung Kai, Henderson Land Development, New World, four major super real estate developers have become a symbol of wealth. Shanghai and Hong Kong real estate listed companies both in quantity and quality are far apart, the reason is naturally related to the degree of development of the two markets, the strength of the competition of the micro subjects, but the two governments on the real estate industry industrial policy of different orientations is also one of the important reasons for the phenomenon mentioned above. In various media and even official government documents in mainland China, there are often reports claiming that the government has decided to cultivate the housing industry into a pillar industry and a new economic growth point. However, when it comes to the implementation of the policy, the authorities concerned have adopted the practice of freezing the listing of real estate companies. The reason for freezing the listing of real estate companies in the first place was the management's concern about the real estate bubble. Indeed, by 1992, the number of real estate developments, the amount of investment in development, the area of construction, etc. had reached a record high, which far exceeded the affordability of China's level of economic development at that time, resulting in a very prominent contradiction between supply and demand. Many places of speculation, speculation in land wind is more serious, resulting in the market operation of the chaotic and disorderly situation. In view of this, the government decisively adopted a tight supply of macro-control policies to control the situation of serious imbalance in the real estate market. Since the Asian financial crisis, many experts and scholars have more or less attributed the cause of the financial crisis to the bursting of the real estate bubble. This has made the Chinese government more cautious in lifting the ban on listing real estate companies. However, the deep causative factors of the financial crisis in Southeast Asia are the aging and lagging adjustment of the economic structure, the poverty of the knowledge reserve, and the backwardness of the total factor growth rate. The real estate bubble is only one of the symptoms of this crisis. Therefore, the management may not stop the listing of real estate companies for fear of a real estate bubble. Besides, the stock market has the function of optimizing the allocation of resources in addition to its role of raising capital. In a more sound stock market, funds will flow from poorly performing enterprises to well performing enterprises, thus achieving optimal allocation of resources. The entry and exit system of the stock market itself also objectively protects the safety of the stock market to a certain extent. Management should do is to give up the protection policy, no longer ST, PT went down, so that China's stock market has truly become a touchstone for enterprises. Such as the U.S. stock market's recent oscillations, some people point out that this is the stock market is squeezing out the bubble, so that high-tech stock pricing more in line with its actual value of the performance.

China's real estate enterprises in addition to expanding the scale of the economy of scale to efficiency, improve the quality of assets, to the management of efficiency is also necessary to cultivate a sound market from the micro. The government at the macro level of institutional innovation, especially the financial system innovation in this regard is a great deal of work. At present, real estate securitization is a desirable direction. Real estate securitization can lead to the specialization of real estate management, resulting in a rational allocation of resources. Real estate operation and management is very demanding, especially in the primary stage of real estate market development, more need for expert management. One of the advantages of securitization is that it promotes the separation of real estate ownership and management, which provides the preconditions for its professional management. China's real estate subject behavior is not standardized, the real estate company with strength and management is not much, "real estate fever" caused by the false prosperity of the market induced a large number of enterprises do not have the conditions to get involved in real estate, the result will inevitably lead to a huge waste of resources, especially management resources, with the help of securitization, real estate to the expert management, the owners of securitization tools to obtain the due returns, investors can also be Share the optimal combination of real estate resources, so that the real estate market subject behavior from chaos to order.

Second, real estate tax analysis

According to the statistics of the Chinese housing index, at present, in China's urban commercial housing price composition, land costs and taxes accounted for 39%, construction and safety costs accounted for 51%, other costs accounted for 10%. In the real estate profit margin has generally dropped to about 10% of the case, the tax burden has become one of the main reasons for the high prices. Taxes and fees are not only related to the high and low prices of housing, which is essentially a price, some taxes, such as income tax and other direct taxes also become a lubricant for the balanced operation of the market economy.

<A> real estate tax and fee total analysis

Taxes, is the government by virtue of its administrative power mandatory income. The various fees are even more numerous. There are three levels of departments that collect these fees. One is the government that has legislative, law enforcement and judicial powers and carries out a wide range of social management functions, including the central and local governments at all levels, various commissions and ministries, public prosecutors and lawyers, etc.; the second level: some institutions responsible for the provision of public ****goods or quasi-public ****goods, such as environmental protection, health, education, etc.. Their incomes are allocated by the government, and at the same time the government grants them the power of law enforcement and supervision within the scope of the undertakings for which they are responsible, such as health inspections, etc.; the third layer: some state-owned enterprises enjoying the status of natural monopolies or administrative monopolies and possessing a certain degree of coercion, such as electric power, water and gas companies, and government-operated intermediary organizations with administrative monopoly rights. These numerous taxes and fees to the decline in housing prices caused a great deal of rigidity. Clean up taxes and fees, the call to rationalize housing prices is rising. But there are concerns that clearing up the taxes and fees will reduce the revenue of government departments.

From a tax point of view, in the short term, reducing tax rates will reduce the revenue of government departments. But in the medium term, if the reduction of the real estate tax burden can make housing prices fall by a sufficient margin to make the effective demand of residents rise substantially, at this time some of the vacant commercial properties that are difficult to sell because of high housing prices are sold, the government will be able to receive the original tax base has been eroded by a variety of fees and charges of the sales tax, land value-added tax, urban construction tax, corporate income tax, deed tax, etc., which can be completely offset by the reduction of a variety of miscellaneous fees and charges. The relationship between tax revenue and tax rate is expressed in a coordinate diagram, from which it can be seen that the tax rate is not the higher the better, the tax rate only reaches a certain optimal point, in order to maximize tax revenue. In the long run, according to the World Bank estimates, the coefficient effect of real estate investment on related industries is two times. When housing consumption is initiated, every hundred million yuan of housing investment will bring about 200 million yuan of GDP growth in related industries, economic development, tax base expansion, the government's income shows a virtuous cycle of growth.

From the perspective of fees, cleaning up all kinds of fees and charges can reduce the distorting effect on the economy, minimize the indirect cost to the economy caused by all kinds of fees and charges, improve the economic efficiency and promote fairness, which will be conducive to a good and stable development of the economy. All kinds of fees and charges to the business enterprise indirect cost is far greater than itself. Fees with many names, departments and links mean that enterprises have to run through at least 20 departments and collect 40 official seals in order to obtain or maintain their legal status. Although some of the fees and charges themselves are not large in amount, enterprises have to spend a lot of manpower and material resources to comply with these regulations. The real estate industry is capital-intensive, and most developers in China are financed indirectly through bank loans, which can be very costly in terms of time. In addition to this, the real estate market is becoming more and more mature, the real estate market has started to launch a variety of popular housing designs. This makes the first mover in the market crucial for the developer and the time value of money takes on a deeper meaning. The existence of various fees and charges reduces the efficiency of economic operation and increases the cost of economic operation. Taxes are taken from the people and used by the people. The various fees and charges become the government departments' own income, and then may become an important cause of corruption. Therefore, clean up the fees to improve the efficiency of economic operation has a more important significance.

<II> part of the fee analysis

From the theory of public **** goods, government departments to provide public **** goods, relying on taxes to raise funds; to provide private goods, should be in accordance with the laws of the market price, and to provide a mixture of products, should be considered to rely on taxes or fees to compensate for the cost of which is highly efficient. In the current real estate industry, some seem to be provided by the government departments of the product from the economic point of view to analyze should be handed over to the market to operate more efficiently.

For example, if the government charges a fee for quality inspection of construction works on behalf of the market, although it is said that consumers' interests can be protected by the government's supervision of the quality of works, there is a great drawback: when the quality supervision station passes a project, it means that the government recognizes the quality of the project, and if the project is defective in the future, will the government bear the responsibility of compensating for the real estate developers? If the government takes the responsibility, the government will easily confuse its role as a manager of economic operation and a party in the market; if the government does not take the responsibility of compensation, the government officials will be completely without the constraints of a good quality control mechanism. If this service is given to intermediaries in the market. There is an equal relationship between the intermediary, the property developer and the home buyer. The profit-maximizing intermediary will strictly control the quality of the property for fear of incurring compensation, which is undoubtedly an improvement in efficiency.

The project quality inspection fee is an example of how government behavior should be turned into market behavior. And for the three traditional natural monopoly industries of water, coal and electricity incremental customer charges, these charges are also economically incompatible with the principle of efficiency. Natural monopoly industries have a large share of fixed costs and a small share of variable costs, and the average cost curve slopes downward. If natural monopolies are not subject to government regulation, they will engage in monopolized production, leading to inefficiency; if such enterprises are divided into several small ones, this will again lead to higher costs and diseconomies of scale. This is the theoretical basis for the government to operate natural monopoly industries not for profit. The government can either adopt marginal cost pricing or average cost pricing. Whichever pricing is used, the utility, can fully cover its costs from prices and subsidies. Now the property developers pay the capacity increase fee, which is finally borne by the consumers, and build the pipeline and cable transmission network, but it is the public utility sector that recovers the cost from the utility charges, gas charges and subsidies, which is tantamount to the consumers paying double costs and the public utility sector making excess profits. This is a departure from the market law of who benefits and who invests. From the point of view of improving social efficiency, these charges for capacity increase should be borne by the public utilities rather than the real estate developers. If the utility sector has financial difficulties, the real estate developer can be responsible for the cost of building the water, electricity and gas transmission network, the construction costs can not be apportioned to the price of the house, and when the utility sector receives the water, electricity and gas bills, and then pay the real estate company for the use of the transmission network.

Three, the economic analysis of affordable housing

Economic housing as the current stage of the national housing construction policy, designed to achieve the purpose of expanding housing supply, regulating the structure of real estate investment and start the market effective demand through some kind of tilt, such as land allocation, tax exemptions and other preferential measures. It is a policy choice based on China's current special real estate market and housing development market development stage. However, the operating mechanism of the affordable housing system, the relationship with the current real estate market, the current policy provisions may produce market reaction, the scope of application of the affordable housing policy and the sustainable development of the affordable housing system and so on, has yet to be theoretically re-explored.

The affordable housing policy, as a policy, is intended to increase the effective demand for housing of low- and middle-income homebuyers through government subsidies. But put into practice but exposed a number of problems: First, the loss of subsidized benefits and the "crowding out effect" on the supply of fully commercial housing. At present, some affordable housing sales targeting in the middle-income families in the high part of the people, and even to attract a family of private cars to compete for the purchase of pride. If, in terms of location, quality, functionality, environment or comfort, such housing meets the needs of middle- and higher-income families in every respect, the higher-income brackets will also try to squeeze into the consumer base of affordable housing, so that the lost benefit of the financial subsidies will eventually be transformed into the surplus of the producers and the surplus of the consumers of a few middle- and higher-income brackets. On the other hand, those middle-income and low-income classes that should really enjoy the subsidies and have difficulties in living are excluded from the scope of the benefits. After raising the standard of affordable housing, its consumer base has a certain crowding-out effect with that of fully commercialized housing. Secondly, it promotes unfair competition and irregular operation in the market. As affordable housing with policy favoritism, it actually enjoys policy resources at a specific stage. If the operation of affordable housing lacks the necessary supervision mechanism, thus forming a "black box operation", some localities and departments in order to obtain the policy concessions related to affordable housing, driven by the interests, it is possible to compete for projects, plans, land, loans under the banner of affordable housing, which is easy to induce the occurrence of transactions and rent-seeking behaviors between the government and enterprises. Thirdly, it raises the cost of policy regulation and reduces the efficiency of the government in regulating the market. In order to make the policy concessions can be expected to transfer to the middle and low-income classes, we need to control the beneficiary surface of affordable housing, to avoid should not enjoy the financial subsidies of the class also from the "benefit". This requires that the focus of policy regulation be directed towards identifying the income levels of households and overseeing the circulation and distribution of affordable housing, which is a cumbersome and ineffective task that detracts from its main function.

Analyzed by the economics of gaming theory, affordable housing as a policy involves the interests of government departments, development enterprises and consumers. Among the three, the relevant government departments have the power to allocate land, tax relief and other powers. At present, the policy favor is a scarce resource for many developers, and it is the object of competition among many developers. And after the developers have earned government policy concessions in various ways, they are likely to operate in violation of the law out of self-interest. Because of the government's affordable housing price control, in accordance with the building of housing "1998" No. 154, the price of affordable housing in addition to the cost, taxes, its development profit shall not exceed 3%. Rational developers will not be willing to engage in this kind of return is lower than the same period of market interest rates of investment projects. But in real life, developers are in a hurry. A reasonable explanation is that the developers false costs to reduce profits, so that it meets the required standards, and as the competent administrative departments can not do anything about it, and may even conspire with the developers to make the false costs legal, artificially high affordable housing profits and selling prices, so that price control in name only. In order to achieve the policy intent of affordable housing, government departments need to pay a certain amount of supervision costs to identify qualified developers. As for homebuyers, although affordable housing is aimed at low and middle-income earners, there are no effective income-testing measures in place during the actual operation. Part of the high-income people also joined the ranks of the purchase of affordable housing, and even some people will be affordable housing listed arbitrage after the purchase of affordable housing for speculation. The mutual gaming of the three parties concerned makes the affordable housing policy deviate from its original policy intent in the course of operation.

Since affordable housing is a subsidy to housing providers, the result of the subsidy is to increase market supply with the same investment expenditure, which leads to a decrease in the equilibrium price and a corresponding increase in housing demand. In order for the benefits of the subsidy to be passed on as far as possible to the income bracket to which the policy is directed. This can only be achieved if consumers sacrifice their demand for other consumer goods. Consumers' aggregate consumption preferences are better met if the government subsidizes them directly. The so-called aggregated consumption preferences of consumers are the consumption choices made by consumers based on their needs and preferences. Illustrated with a no-difference curve as shown in the figure:

With the method of giving out subsidies will bring higher utility to the consumer, while giving out subsidies to the supplier, it is possible that the housing supplied by the supplier is not the one that the consumer needs or the most important one, and then the consumer will have difficulty in getting the maximum satisfaction. In the figure, MN line represents other consumer goods (x) and housing (y) the price of a certain, issued a cash formed by the budget line, such as issued a subsidy to the person, the consumer can get y1 of other consumer goods and y1 of housing, the utility gained for u1, such as cash to allow consumers to freely choose according to preference, the consumer will buy x2 of other consumer goods and y2 of housing, the utility gained for u2, u2& gt;u1.