A Study On Transmission Effects Of China's Monetary Policy Through Real Estate Price

Since the housing reform in China in 1998,there is a rapid development of China's real estate industry. Starting from 2000,both needs and supplies are increasing, China's real estate industry are flourishing. In many areas real estate has become a pillar industry, the real estate industry showed a continued prosperous state, and has became a new economic growth point and the consumer hotspots. But at the same time, the real estate prices are rising rapidly; it takes some negative social impacts in both macro and micro-economic aspects, and influences the economic and financial operations.Since 2003, although we have introduced a series of tightening monetary policy, China's real estate prices are still high, so the effectiveness of monetary policy was questioned. We know that the sensitive and effective monetary policy transmission mechanism is the basis for the successful implementation of monetary policy. So there is some practical significance to research the China's currency monetary policy conduction effect through the real estate prices.In this paper, we'll study China's monetary policy conduction effect through the real estate price. The main issue is to work out whether China's monetary policy transmission mechanism through real estate prices is effective. Along this problem, it first analyzed theoretically how the monetary policy works on the real estate prices, and then how the fluctuations of real estate price affect the real economy. After that it use the methods of correlation analysis, Granger causality analysis, cointegration analysis, the impulse response function and variance decomposition analysis, to find out the impact and lags of China's monetary policy to real estate price and also the real estate price to the real economy. the empirical result shows that: the monetary policy can affect real estate price, the money supply plays a more important role than interest rate policy, and the lags of interest rate policy is longer, the increase in short-term interest rates will be accompanied by the rise in real estate prices; real estate prices could affect the economic entities, and the overall efficiency of high real estate prices on investment is greater than the impact on consumption.From the empirical analysis results, it shows that China's real estate prices can transfer the effects of monetary policy to the real economy, while although monetary policy have some control to real estate price, the overall effect of regulation is not ideal. This article will then take care of the real estate market participants, to analyze the obstacles in the process of China's monetary policy to regulate and control real estate price, and propose appropriate countermeasures, trying to provide some theory and practice support for a healthy and stable development of China's real estate market.