A Study On Impact Of Real Estate Price To The Monetary Policy Transmission

The rapid development of China's real estate industry become an important force to promate related industries and economic growth. But and the same time, the real estate prices are rising rapidly and develoer's excessive investment, it takes some negative impacts in both social and economic. Since 2003, the central bank of China has introduced a series of tightening monetary policy to regulate real estate price. The relationship between monetary policy and real estate price claimed our attention. Under such backgroud there exists significance of smoothing the price fluctuation of the market and stablilizing financial system to probe the impact of real estate price on monetary policy transmission.The thesis select monthly data of China from January,2000 to October,2009,anlyzed how the monetary policy works on the real estate price, how the fluctuations of real estate price affect the real economy, the relationship between real estate price and ultimate objective of the monetary policy. These empirical study base on Vector Auto Regression, and methods including Johanse cointergration test, Granger causality test, impulse response function and variance decomposition.The main results of empirical study are as follows:The monetary policy can affect real estate price, the increase in short-term real interest rate will be accompanised by the rise in real estate prices, the reaction of real estate price shocks to real interest is not notable in long-term, and the lags of rate policy is long, and reach to 16 month. The increase of money supply promoted real estate prices goes up, using a shock to money supply, the response of house price keeping reising up except first two months. The consumption effect of the house price is weak, and there was negative wealth effect in short-term. The real estate price becames to be the Granger cause of fluctuation of fixed asset investment, using a shock to house price, the response of investment is keeping rising from 6th months, so the investment effect is little strong. While the reaction of inflation and output on shocks to real estate in weak, and the real estate can't became Granger cause of inflation and output,so the effects house price bring to inflation and out put is very limited.Overall, the real estate price both impact on transimission of China's monetary policy and exist some obstacle. In order to imporve China monetary policy transmission through real estate price ,the thesis gives an appropriate proposal combined with emprical analysis results. Firstly, reform and deepen monetary policy syserm, secondly, development and improvement of real estate market.