Chinese Monetary Policy, Real Estate Price Transmission Mechanism Obstacles

The development of real estate industry expands the action scope of China's monetary policy and provides new transmission channels of the monetary policy, but it also brings many challenges. The increase in transmission channels makes the transmission mechanism of the monetary policy more complex and the implementation of the monetary policy more difficult. Therefore, the analysis on the obstacles in the transmission mechanism of China's monetary policy through real estate price is very important for the healthy development of the real estate industry and the improvement of the monetary policy's validity.First, this paper separately analyzes the two transmission links in the transmission mechanism of the monetary policy through real estate price theoretically. In the first link, monetary policy influences the real estate price through interest rate, credit and asset portfolio channels. In the second link, the real estate price has an impact on the real economy through influencing consumption, investment and imports and exports. Then in empirical part, this paper takes the monthly data from January 2000 to December 2008 as sample data and uses cointegration test, vector error correction model and Granger causality test to test the smoothness of the transmission mechanism of China's monetary policy through real estate price, then draws the conclusion that there are obstacles in this transmission mechanism. Based on the empirical conclusion, this paper analyzes those obstacles in detail, including the problems of China's monetary policy and the behavioral biases of the real estate market participants, and points out the regional difference effectiveness in the transmission mechanism in particular. Finally, this paper proposes appropriate countermeasures, including improving the control system of China's monetary policy, improving China's real estate market and improving the system of China's real estate finance, trying to provide theoretical and practical supports for the effective implementation of China's monetary policy.