The Heterogeneous Effect Of Housing Prices Fluctuation On Homeowners Consumption

For the background of the rise of housing prices, while consumption is clearly insufficient, how to regulate the housing market in a much better way so as to to expand domestic demand, is the current problem to be urgently studied and solved.This paper studies the heterogeneous effect of housing prices fluctuation on homeowners consumption from two aspects of regional heterogeneity and heterogeneous homeowners.Since the input-output price model can deeply study the direct and indirect impact of a sector price changes on other sectors prices by passing effect, So in order to solve the problem eight categories’ consumer goods prices data is difficult to obtain,thus this paper establishes input-output price model to empirically study the effect of25 provinces(autonomous regions and municipalities) housing prices move together different amplitudes on consumer goods prices respectively. The result of 25provinces(autonomous regions and municipalities) consumer price range is the consumer prices variables in QUAIDS model. Then, this paper uses CFPS 2010 data,and adds the demographic characteristic variable which can reflect the family area in the QUAIDS model to study the effect of housing prices fluctuation on homeowners consumption structure from regional heterogeneity. The results show that the wealth effect of housing price fluctuations on homeowners subsistence consumer demand is significantly affected from regional heterogeneity, but the crowding effect on enjoyment and development consumer demand is significantly affected from regional heterogeneity. On this basis, the paper further studies the effect of housing prices fluctuation on homeowners consumption welfare from regional heterogeneity by using compensating variable methods. The results show that in order to improve the life quality of homeowners and promote social harmony and stability, the government should stabilize the housing prices of eastern region in the first place. And whenproblem of how to optimize household consumption structure, the government should divide the market according to regional differences.According to heterogeneous expectations of homeowners on future housing prices changes, this paper divides homeowners into savings-type household and load-type household. As compared with traditional utility function, CES utility function has a more general nature, and does not require a lot of assumptions, this paper uses CES utility function to represent lifetime utility function of savings-type household and load-type household under the framework of DSGE model. In this paper, since development of the housing market cannot work without the strong support of banks system, we introduce simultaneously the banking system and macro-prudential policy tools to the framework of DSGE model. In order to maximize profits, the commercial banks will adjust the amount of credit, resulting in adjustment costs. This paper introduces the dynamic loan to value ratio macro-prudential policy tools in load-type household and intermediate goods manufacturers, also introduces simultaneously the idea that central bank controls the total amount of credit through dynamic loan to value ratio. Counterfactual simulation results show that when there is a modest decrease in the minimum down payment ratio, direct wealth effect of housing prices fluctuations on homeowners consumption rate is significantly affected, and the household balance sheet effect on load-type household consumption rate is significantly affected. But when there is an excessive decrease in the minimum down payment ratio, substitution effect of housing prices fluctuations on homeowners consumption rate is significantly affected. Housing prices fluctuations variance decomposition results show that in macro-prudential regulatory framework, housing prices fluctuation are very sensitive to the housing preferences shock.