| The real estate market of China is booming since the monetization reform of housing in 1998, house price soaring and investment increasing rapidly. But various problems appear with the prosperity of the market. History implies that immoderate fluctuation of real estate market will undermine the stability of financial system and economy. The Central bank of China has actively taken treasures to regulate the demand and supply of the market. Under such background there exists significance of smoothing the price fluctuation of the market and stabilizing financial system and macro-economy to probe the impact of real estate market on monetary policy, explore the efficiency of the regulation of monetary policy on the market, examine wealth effect on consumption and investment effect of house price and study relationship between house price and demand and supply of currency.Applying data of China, the paper empirically studied the impact of real estate market on monetary policy with flexible methods, that is, applying Vector Auto- Regression, Vector Error Correction Model and Granger Test based VECM to unsteady time series as well as applying Ordinary Least Square to steady time series with correction when error series were auto-related.The main results of empirical study are as follows:The monetary policy of China couldn't efficiently control the price of house while the investment of real estate market was efficiently controlled. The inefficiency were resulted from the restriction of macro-economy, the incompatity of macro-regulation sectors, expectation and inactive local government.There was negative wealth effect in China market, that is, the climbing house price came along with the descending consumption. The main cause of that symptom lay in that most citizens purchased house for inhabitancy and higher price was meaning of more first payment and installment for buyer and higher rent. The ascending price took up larger part of consumption and restrained other consumption. House price and fixed-asset investment was positively related, meaning that there existed q effect and balance sheet effect in house market of China.The house price and the demand of currency were positively related. The appending investment and house demand of the market forced more supply of currency. The impact of the market on M2 was more significant, which resulted in the decline of liquidity ratio of currency.The empirical results brought insights into monetary policy. First, the central bank should keep a close eye on the real estate market. Second, currency supply and interest rate should be selected as the intermediary goal of monetary policy. Finally, the central bank should take forward-looking attitude. When it comes to the regulation of house price, the central bank should take an active role of interfering in advance instead of aftermath. |
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