Effects of the Implementation of the Broadband China Policy (BCP) on House Prices: Evidence from a Quasi-Natural Experiment in China

Abstract

With the rapid development of digital finance, the implementation of digital infrastructure is becoming increasingly significant. Broadband construction is an important part of the communication network, and can promote urban infrastructure in cities. However, whether the development of broadband can affect housing prices by affecting the urban infrastructure and the convenience of residents is a question worth addressing. In this study, using panel data regarding cities in China, we used the spatial multi-period difference-in-differences (SDID) model to investigate the utility of the Broadband China Policy (BCP) on urban house prices and the mechanism of impact. We found that the BCP can increase house prices, and that this impact has a positive spatial spillover effect. This conclusion still held after a series of tests such as parallel trend tests, placebo tests, and the exclusion of other policy effects. The BCP can increase house prices by improving urban infrastructure, promoting urbanization, and optimizing urban industrial structure. In addition, we conducted a heterogeneity analysis by taking into consideration the administrative level, economic development level, and location of cities. The findings of this paper not only enrich the research on the BCP and housing prices, they also provide policy recommendations in terms of urban land use and sustainable development.

The Impact of the Digital Economy on Urban House Prices: Comprehensive Explorations

“…In addition, this study again attempted to test for endogeneity and then applied two-stage least squares analysis via instrumental variables to address any arising endogeneity issues. Specifically, referring to Wang et al (2023b), the lagged first-order term of the explanatory variable "digital economy" was used as an instrumental variable to solve the endogeneity problem through the two-stage least squares method. The validity of an instrumental variable requires that it satisfies both exogeneity and endogeneity conditions to ensure that no new bias is introduced.…”