Influence of Government spending on the house prices in Vietnam
Influence of Government spending on the house prices in Vietnam

Summary/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.

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