Measuring Total Factor Productivity of China’s Real Estate Industry——Based on the Perspective of Data Reconstruction

This paper adopts the theory-based double deflation method to measure real value added growth rate of real estate using the reconstructed producer price index of real estate, and also measures capital and labor inputs by following theoretical methods. Moreover, the KLEMS method adopted in this paper is based on gross output production function, taking into account the important role of intermediate inputs. From 1978 to 2018, the growth of both gross output and value added of China’s real estate industry was mainly due to the rapid growth of capital, and TFP played a certain inhibitory role. Based on the decomposition results of the growth rate of value added, the average annual growth rate of TFP during the entire period is -4.0%, while the result obtained by adopting the conventional methods in the existing studies is -0.3%. The measurement errors in both output and input indicators have caused the existing studies to overestimate output and underestimate input, thereby ultimately overestimating the TFP growth rate. The results of this paper have stronger volatility than those obtained by adopting the methods in the existing studies, and volatility may be the concrete manifestation of the actual operational dynamics of China’s real estate industry. JEL Classification: C81 D24 O41