The Impact of Housing Support Expenditure on Urban Residents’ Consumption—Evidence from China

Round 1

Reviewer 1 Report

This paper examines the impact of government housing security expenditure on urban residents' consumption using data from 1999-2009 and 2010-2020. The goal is to study the effect of affordable housing and housing security spending on households' consumption in urban China, as China's economic growth model is shifting from export- and investment-led to domestic demand-led. 

The study finds that government housing security has a positive effect on the total level of urban residents' consumption expenditure.  Financial subsidies for housing security have a better effect on consumption than the construction of affordable housing. High housing prices weaken this relationship. Said differently, this study identifies the crowding-out effect of commodity housing prices on consumption. The study is interesting in its examination of both "making up for bricks" and "making up for people" approaches to housing security. 

The paper concludes that housing security expenditure is an important way to promote consumption and sustainable development and recommends that governments increase the effective supply of guaranteed housing, establish a sound and diversified housing security system, expand housing security expenditure, and improve the efficiency of housing security supply. The relevant expenditure should also be moderately tilted between regions to promote consumption potential.

I like the original idea of this paper. However, the language is difficult to understand. There are many unexplained terms. This paper would benefit from providing more background information about the history and the source of housing security expenditure. How is it financed? Who benefits from the policy?

It is not surprising that public housing expenditure is associated with household consumption. However, what are the mechanisms through which the expenditure leads to consumption? If the housing spending is on primary low-income households, then the rising consumption may be more effective on non-discretionary spending. 

Household expenditure is measured at the city level. Given the changing distribution of household income and the aging population, can the ecological fallacy be a potential concern for this paper?

 

More summary statistics would be beneficial. 

The writing requires significant improvement, particularly in defining key terminologies. For instance, could you provide a more comprehensive definition of housing security expenditure, including its various components? Furthermore, which level of government is responsible for financing this expenditure? Who are the recipients and what is the eligibility for receiving support? What does "the housing security supply" mean?

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Reviewer 2 Report

This paper establishes the link between housing security expenditure and the consumption behaviour of urban residents in China. This is a topical issue that concerns all governments, and the example of China cited by the authors doesn't reduce its scope.

Let me point out at the outset that mathematical notations must be clearly identified and defined according to the conventions of geometry, whether it is a point A, a surface S, a segment [AB], a curve (C), a line (AB) or a distance AB etc. When summoning the mathematical tools, be more rigorous because they cannot be mixed as you do. Also, it would be clearer to index the areas you comment on if they are chopped or poached.

Please fix the statement in the sentence on line 292 that announces the statement of the hypothesis.

Referring to the content, your work begins with a state of knowledge on the subject in which the authors justify the relevance of their topic. It’s followed by a theoretical analysis and formulation of the main hypothesis. Unfortunately, this section is purely speculative. Your analysis is based on a detailed but unreferenced account of Chinese social housing investment policy. Do you not have any study or public documents to back up your assertions? It would be more interesting to inform some of the statements with statistical data or existing studies on the subject. It is not clear from which model or databases the graphs were taken.

The data are significant in terms of volume, but their units are not shown anywhere to appreciate them. Can you specify the units of the variables presented in your tables and used in the model?

The exploitation and interpretation of the results are relatively difficult to understand, so please organise better or you risk being illogical in your reasoning. In fact, when observing the effect of increasing the level of government housing security by every 1%, at two different parts of the results, you mixed different period of time and models. From line 459 to 461, you talked about lnhse moving from 0.021% of modele 3 (period 2010 to 2020) to 0.152% of modele 2 (period 1999 à 2009). And from line 562 to 564, lnhse moving from 0.006% of modele 1 to 0.185% modele 2 both on period 1999 to 2009.

Although the article already points this out in the recommendations, the failure to take into account the differences in consumption behaviour between city dwellers in different regions of China could make the model less realistic. In order to develop a workable model that can be used as a decision support tool for policy makers, it would be essential to consider this parameter, which can strongly bias the expected results and also render the expected short or long term forecasts invalid. However, this does not detract from the relevance of your results to the objectives you have set out.

Author Response

Please see the attachment.

Author Response File: Author Response.pdf

Round 2

Reviewer 2 Report

the observations have been taken into account in this new manuscript with the exception of the last one dealing with taking into account the differences in consumption behavior between city dwellers in different regions of China.

Author Response

Q: the observations have been taken into account in this new manuscript with the exception of the last one dealing with taking into account the differences in consumption behavior between city dwellers in different regions of China.

Response: Thank you very much for your suggestions to revise this paper. The paper has taken into account regional differences in the analysis of this paper as suggested by your revisions and has drawn the corresponding conclusions. Please see lines 677-725 and 817-821.

Author Response File: Author Response.pdf