Empirical Research Of China's Housing Price Fluctuation Affect The Economy

Overview the history of the world's economic and financial development, real estate fluctuations affect macro-economic cycle closely, real estate price fluctuations tend to deal a blow to the economy. The traditional economic theories which emphasize the physical factors in economic fluctuations have been unable to explain the reality of global economic recession triggered by the U.S. subprime mortgage crisis in 2007. The financial accelerator theory proposed by Bernanke and others study the laws of modern economic cycle based on the principal-agent problem which is a new perspective. It explained the "small shocks, big fluctuations" problem, and told that the small impact was continuously strengthened and enlarged after the conduction of the financial factors and then resulted large fluctuations in the economy. The theory shows a strong explanatory power in explaining the operation of the current macroeconomic.This article is based on the financial accelerator theory, study the mechanisms of real estate prices fluctuations act on consumption and investment by constructing two local dynamic equilibriums which contain the financial accelerators including residents and Enterprises. And use the econometric methods of VAR model and impulse response functions, variance decomposition to test the theoretical results. On the one hand, systematically analysis the channels and the mechanisms of real estate price fluctuations impact on the economy in theory; the other hand, have an empirical verification to the mechanism.Conclusions: the financial accelerator of China's real estate price fluctuations act to the macroeconomic is existed, both of residents and enterprises. However, the enterprises'financial accelerator is more obvious than the residents'. The tests of VAR model and impulse response functions, variance decomposition make the same conclusions with the theory, those are real estate prices can affect the economy through the credit, and the overall efficiency is high, the impact of real estate price to investment is greater than to the consumption. The reason why small shocks can cause large fluctuations is not the shock itself, but the transmission mechanism - the role of credit market accelerator. Finally, to eliminate the negative effects of financial accelerator, this article proposes the policy recommendations from how to hedge and completely eliminate the...