Transmission Mechanism Of Monetary Policy On House Prices Empirical Analysis

Ever since 1998, when our housing industry began monetization, real estate industry has developed a lot and its impact on national economy has also been growing. While economy grows fast, its demand for delicate monetary policy operation is also growing. In general, there are two monetary policy transmission mechanisms including monetary channel and credit channel, which both exist and play their roles. This article applies monetary policy transmission mechanism theory to real estate market and focuses on the channels through which monetary policy influence house price. That means the object is to figure out how the policy affects the house price through the two channels and what are their difference. The research can contribute theoretical and practical guides to regulation of real estate market and monetary policy operation.Firstly, research background, framework and innovation points are given, which are followed by review of monetary policy transmission mechanism theory and relevant researches on its application to real estate market. Then two VAR models are set up in order to analyze monetary channel and credit channel respectively, through which the relations among some important variables in real estate market are elaborated through usage of unit root test, Granger causality test and impulse response function. It comes out real estate investment will boost house price in short term while curb its growth in long term; interest growth has little impact on development loan, which is somewhat led by prior house price growth, but interest can definitely affect personal mortgage. In long run, interest hike contributes to house price growth, so it is skeptical to take interest increase as a suppressing mean to curb price growth. On the basis of detailed analysis of the channels, an integrated VAR model is set up and it turns out that the credit channel is more efficient while monetary channel effect has longer duration and bigger strength, which means current major channel through which monetary policy exerts influence is monetary channel. Finally, according to the empirical study result, some policy suggestions are given, including curbing money supply growth as the fundamental way to deter house price high growth and consideration of transmission efficiency of policy.