{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,4,15]],"date-time":"2026-04-15T18:40:23Z","timestamp":1776278423198,"version":"3.50.1"},"reference-count":39,"publisher":"Public Library of Science (PLoS)","issue":"4","license":[{"start":{"date-parts":[[2026,4,15]],"date-time":"2026-04-15T00:00:00Z","timestamp":1776211200000},"content-version":"vor","delay-in-days":0,"URL":"http:\/\/creativecommons.org\/licenses\/by\/4.0\/"}],"content-domain":{"domain":["www.plosone.org"],"crossmark-restriction":false},"short-container-title":["PLoS One"],"abstract":"<jats:p>This study systematically analyzes the choice of fiscal rules under Hong Kong\u2019s land finance pattern and their macroeconomic implications for the first time through DSGE methods. Using quarterly data from 2000 Q1 to 2023 Q4, we employs Bayesian estimation and simulation to compare the effects of three fiscal rules: the fully exogenous rule, the output-responsive rule, and the debt-responsive rule. Results indicate that the debt-responsive rule delivers optimal outcomes in stabilizing consumption, investment, and labor markets. It effectively curbs pressures from rising government debt and property prices while enhancing fiscal sustainability. Welfare comparison results similarly confirm the superiority of the debt-responsive rule over the other two policies. Variance decomposition reveals that stamp duty shocks constitute the primary fiscal source of Hong Kong\u2019s macroeconomic fluctuations, exerting significant impacts particularly on net exports, labor markets, and the government debt-to-revenue ratio. The conclusions of this study hold significant policy implications for Hong Kong and other economies with similar characteristics.<\/jats:p>","DOI":"10.1371\/journal.pone.0346966","type":"journal-article","created":{"date-parts":[[2026,4,15]],"date-time":"2026-04-15T17:40:38Z","timestamp":1776274838000},"page":"e0346966","update-policy":"https:\/\/doi.org\/10.1371\/journal.pone.corrections_policy","source":"Crossref","is-referenced-by-count":0,"title":["Land Finance and fiscal rules: An estimated DSGE model for Hong Kong"],"prefix":"10.1371","volume":"21","author":[{"given":"Wenwen","family":"Zhang","sequence":"first","affiliation":[],"role":[{"role":"author","vocabulary":"crossref"}]},{"ORCID":"https:\/\/orcid.org\/0009-0004-2036-5266","authenticated-orcid":true,"given":"Zongyi","family":"Liu","sequence":"additional","affiliation":[],"role":[{"role":"author","vocabulary":"crossref"}]}],"member":"340","published-online":{"date-parts":[[2026,4,15]]},"reference":[{"issue":"4","key":"pone.0346966.ref001","doi-asserted-by":"crossref","first-page":"897","DOI":"10.1177\/0042098015624838","article-title":"Developing by borrowing? Inter-jurisdictional competition, land finance and local debt accumulation in China","volume":"54","author":"F Pan","year":"2016","journal-title":"Urban Studies"},{"key":"pone.0346966.ref002","doi-asserted-by":"crossref","first-page":"225","DOI":"10.1016\/j.econmod.2014.12.033","article-title":"The business cycle implications of land financing in China","volume":"46","author":"S Guo","year":"2015","journal-title":"Economic Modelling"},{"key":"pone.0346966.ref003","doi-asserted-by":"crossref","first-page":"294","DOI":"10.1016\/j.iref.2022.02.070","article-title":"Fiscal policy choices of local governments in China: Land finance or local government debt?","volume":"80","author":"Y Cheng","year":"2022","journal-title":"International Review of Economics & Finance"},{"key":"pone.0346966.ref004","doi-asserted-by":"crossref","first-page":"316","DOI":"10.1016\/j.econmod.2010.08.016","article-title":"Stock market wealth effects in an estimated DSGE model for Hong Kong","volume":"28","author":"M Funke","year":"2011","journal-title":"Economic Modelling"},{"key":"pone.0346966.ref005","doi-asserted-by":"crossref","DOI":"10.2139\/ssrn.1713186","volume-title":"What can an open-economy DSGE model tell us about Hong Kong\u2019s housing market?","author":"M Funke","year":"2010"},{"issue":"1","key":"pone.0346966.ref006","doi-asserted-by":"crossref","first-page":"62","DOI":"10.1016\/j.jhe.2012.11.001","article-title":"Housing prices and the business cycle: An empirical application to Hong Kong","volume":"22","author":"M Funke","year":"2013","journal-title":"Journal of Housing Economics"},{"key":"pone.0346966.ref007","doi-asserted-by":"crossref","DOI":"10.5089\/9781484347577.001","volume-title":"An estimated DSGE model to analyze housing market policies in Hong Kong SAR","author":"MP Rabanal","year":"2018"},{"issue":"2","key":"pone.0346966.ref008","doi-asserted-by":"crossref","first-page":"304","DOI":"10.1111\/j.1468-0106.2012.00584.x","article-title":"Macroeconomic volatility and counterfactual inflation\u2010targeting in Hong Kong","volume":"17","author":"GC Lim","year":"2012","journal-title":"Pacific Economic Review"},{"issue":"06","key":"pone.0346966.ref009","doi-asserted-by":"crossref","first-page":"2434","DOI":"10.1017\/S136510051700075X","article-title":"The regime-dependent evolution of credibility: a fresh look at Hong Kong\u2019s linked exchange rate system","volume":"23","author":"B Blagov","year":"2018","journal-title":"Macroecon Dynam"},{"issue":"2","key":"pone.0346966.ref010","first-page":"125","article-title":"Housing Market Spillovers: Evidence from an Estimated DSGE Model","volume":"2","author":"M Iacoviello","year":"2010","journal-title":"American Economic Journal: Macroeconomics"},{"issue":"1","key":"pone.0346966.ref011","doi-asserted-by":"crossref","first-page":"140","DOI":"10.1086\/689606","article-title":"The Macroeconomic Effects of Housing Wealth, Housing Finance, and Limited Risk Sharing in General Equilibrium","volume":"125","author":"J Favilukis","year":"2017","journal-title":"Journal of Political Economy"},{"key":"pone.0346966.ref012","volume-title":"Das House-Kapital: A Long Term Housing & Macro Model","author":"V Grossmann","year":"2017"},{"issue":"3","key":"pone.0346966.ref013","doi-asserted-by":"crossref","first-page":"707","DOI":"10.1111\/j.1467-937X.2005.00349.x","article-title":"Monetary Policy and Exchange Rate Volatility in a Small Open Economy","volume":"72","author":"J Gali","year":"2005","journal-title":"Rev Econ Studies"},{"issue":"3","key":"pone.0346966.ref014","doi-asserted-by":"crossref","first-page":"739","DOI":"10.1257\/0002828054201477","article-title":"House Prices, Borrowing Constraints, and Monetary Policy in the Business Cycle","volume":"95","author":"M Iacoviello","year":"2005","journal-title":"American Economic Review"},{"issue":"2","key":"pone.0346966.ref015","doi-asserted-by":"crossref","first-page":"242","DOI":"10.1016\/j.jmoneco.2008.09.013","article-title":"New Keynesian models, durable goods, and collateral constraints","volume":"56","author":"T Monacelli","year":"2009","journal-title":"Journal of Monetary Economics"},{"key":"pone.0346966.ref016","doi-asserted-by":"crossref","first-page":"103604","DOI":"10.1016\/j.jmacro.2024.103604","article-title":"Central bank objectives, monetary policy rules, and limited information","volume":"80","author":"J Benchimol","year":"2024","journal-title":"Journal of Macroeconomics"},{"key":"pone.0346966.ref017","doi-asserted-by":"crossref","first-page":"101266","DOI":"10.1016\/j.jfs.2024.101266","article-title":"Desirable banking competition and stability","volume":"73","author":"J Benchimol","year":"2024","journal-title":"Journal of Financial Stability"},{"issue":"1","key":"pone.0346966.ref018","doi-asserted-by":"crossref","first-page":"1","DOI":"10.1086\/426038","article-title":"Nominal Rigidities and the Dynamic Effects of a Shock to Monetary Policy","volume":"113","author":"LJ Christiano","year":"2005","journal-title":"Journal of Political Economy"},{"issue":"1","key":"pone.0346966.ref019","doi-asserted-by":"crossref","first-page":"163","DOI":"10.1016\/S0022-1996(02)00056-9","article-title":"Closing small open economy models","volume":"61","author":"S Schmitt-Groh\u00e9","year":"2003","journal-title":"Journal of International Economics"},{"key":"pone.0346966.ref020","doi-asserted-by":"crossref","DOI":"10.2139\/ssrn.2235627","volume-title":"Is government spending a free lunch? Evidence from China","author":"X Wang","year":"2013"},{"issue":"3","key":"pone.0346966.ref021","doi-asserted-by":"crossref","first-page":"1147","DOI":"10.3982\/ECTA8994","article-title":"Land-price dynamics and macroeconomic fluctuations","volume":"81","author":"Z Liu","year":"2013","journal-title":"Econometrica"},{"key":"pone.0346966.ref022","doi-asserted-by":"crossref","first-page":"639","DOI":"10.1016\/j.jmoneco.2020.03.017","article-title":"Low-frequency fiscal uncertainty","volume":"117","author":"Z Han","year":"2021","journal-title":"Journal of Monetary Economics"},{"key":"pone.0346966.ref023","doi-asserted-by":"crossref","first-page":"189","DOI":"10.1016\/j.jmacro.2017.04.007","article-title":"Flexible fiscal rules and countercyclical fiscal policy","volume":"52","author":"M Guerguil","year":"2017","journal-title":"Journal of Macroeconomics"},{"key":"pone.0346966.ref024","doi-asserted-by":"crossref","first-page":"138","DOI":"10.1016\/j.econmod.2017.05.017","article-title":"Is fiscal policy always counter- (pro-) cyclical? The role of public debt and fiscal rules","volume":"65","author":"J-L Combes","year":"2017","journal-title":"Economic Modelling"},{"issue":"2","key":"pone.0346966.ref025","doi-asserted-by":"crossref","first-page":"294","DOI":"10.1016\/j.red.2013.08.003","article-title":"Toward a Taylor rule for fiscal policy","volume":"17","author":"M Kliem","year":"2014","journal-title":"Review of Economic Dynamics"},{"issue":"2","key":"pone.0346966.ref026","first-page":"57","article-title":"Financial stability, the trilemma, and international reserves","volume":"2","author":"M Obstfeld","year":"2010","journal-title":"American Economic Journal: Macroeconomics"},{"issue":"1","key":"pone.0346966.ref027","doi-asserted-by":"crossref","first-page":"196","DOI":"10.1257\/aer.101.1.196","article-title":"Growing Like China","volume":"101","author":"Z Song","year":"2011","journal-title":"American Economic Review"},{"key":"pone.0346966.ref028","doi-asserted-by":"crossref","first-page":"667","DOI":"10.1016\/j.eap.2024.07.009","article-title":"What does housing collateral mean for Hong Kong economy? From the perspective of modelling and policy implication","volume":"83","author":"Z Zhao","year":"2024","journal-title":"Economic Analysis and Policy"},{"issue":"5","key":"pone.0346966.ref029","doi-asserted-by":"crossref","first-page":"831","DOI":"10.1162\/rest_a_00706","article-title":"Why You Should Never Use the Hodrick-Prescott Filter","volume":"100","author":"JD Hamilton","year":"2018","journal-title":"The Review of Economics and Statistics"},{"key":"pone.0346966.ref030","doi-asserted-by":"crossref","first-page":"61","DOI":"10.1016\/j.jpubeco.2014.07.005","article-title":"The incidence of transaction taxes: Evidence from a stamp duty holiday","volume":"119","author":"T Besley","year":"2014","journal-title":"Journal of Public Economics"},{"issue":"2","key":"pone.0346966.ref031","first-page":"214","article-title":"Mansion Tax: The Effect of Transfer Taxes on the Residential Real Estate Market","volume":"7","author":"W Kopczuk","year":"2015","journal-title":"American Economic Journal: Economic Policy"},{"issue":"1","key":"pone.0346966.ref032","doi-asserted-by":"crossref","first-page":"157","DOI":"10.1093\/restud\/rdx032","article-title":"Housing Market Responses to Transaction Taxes: Evidence From Notches and Stimulus in the U.K","volume":"85","author":"MC Best","year":"2017","journal-title":"The Review of Economic Studies"},{"issue":"4","key":"pone.0346966.ref033","doi-asserted-by":"crossref","first-page":"861","DOI":"10.1111\/1467-937X.00270","article-title":"Optimal Interest-Rate Smoothing","volume":"70","author":"M Woodford","year":"2003","journal-title":"The Review of Economic Studies"},{"issue":"1","key":"pone.0346966.ref034","doi-asserted-by":"crossref","first-page":"116","DOI":"10.1016\/j.jinteco.2008.02.007","article-title":"Optimal monetary and fiscal policy in a currency union","volume":"76","author":"J Gal\u00ed","year":"2008","journal-title":"Journal of International Economics"},{"issue":"2","key":"pone.0346966.ref035","doi-asserted-by":"crossref","first-page":"189","DOI":"10.1016\/j.jmoneco.2009.12.007","article-title":"Local identification in DSGE models","volume":"57","author":"N Iskrev","year":"2010","journal-title":"Journal of Monetary Economics"},{"issue":"6","key":"pone.0346966.ref036","doi-asserted-by":"crossref","first-page":"1995","DOI":"10.3982\/ECTA8916","article-title":"Dynamic identification of dynamic stochastic general equilibrium models","volume":"79","author":"I Komunjer","year":"2011","journal-title":"Econometrica"},{"issue":"1","key":"pone.0346966.ref037","doi-asserted-by":"crossref","first-page":"95","DOI":"10.3982\/QE126","article-title":"Identification and frequency domain quasi-maximum likelihood estimation of linearized dynamic stochastic general equilibrium models","volume":"3","author":"Z Qu","year":"2012","journal-title":"Quantitative Economics"},{"issue":"3","key":"pone.0346966.ref038","doi-asserted-by":"crossref","first-page":"586","DOI":"10.1257\/aer.97.3.586","article-title":"Shocks and Frictions in US Business Cycles: A Bayesian DSGE Approach","volume":"97","author":"F Smets","year":"2007","journal-title":"American Economic Review"},{"issue":"2","key":"pone.0346966.ref039","doi-asserted-by":"crossref","first-page":"850","DOI":"10.1086\/696277","article-title":"Government Spending Multipliers in Good Times and in Bad: Evidence from US Historical Data","volume":"126","author":"VA Ramey","year":"2018","journal-title":"Journal of Political Economy"}],"container-title":["PLOS One"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/dx.plos.org\/10.1371\/journal.pone.0346966","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2026,4,15]],"date-time":"2026-04-15T17:40:46Z","timestamp":1776274846000},"score":1,"resource":{"primary":{"URL":"https:\/\/dx.plos.org\/10.1371\/journal.pone.0346966"}},"subtitle":[],"editor":[{"given":"Ahmad Hassan","family":"Ahmad","sequence":"first","affiliation":[],"role":[{"role":"editor","vocabulary":"crossref"}]}],"short-title":[],"issued":{"date-parts":[[2026,4,15]]},"references-count":39,"journal-issue":{"issue":"4","published-online":{"date-parts":[[2026,4,15]]}},"URL":"https:\/\/doi.org\/10.1371\/journal.pone.0346966","relation":{},"ISSN":["1932-6203"],"issn-type":[{"value":"1932-6203","type":"electronic"}],"subject":[],"published":{"date-parts":[[2026,4,15]]}}}