The Research Of The Relation Between Asset Price And Macro-economy Variables In China

Since 1980's,inflation in major countries and regions in the world was effectively under control,what is contrast is that a dramatical fluctuation between inflation and deflation occurs among world financial market specifically at the stock and real estate markets.From the perspective of China,it is not uncommon to see stock prices at times increasing and others decreasing drastically during the decade since the establishment ofthe stock market.Meanwhile real estate price fluctuates from one end to the other.It is obvious that a sizable fluctuation of asset prices would impose a great influence on the national economy and financial stability.However,the mechanism under which the asset prices affect economy,consumption and investment,etc.is yet to be fully realized.For example,in terms of the two relatively common assets,house and stock,current studies on their impacting channel and impacting extent to real economy are not concluded unanimously.The conclusion of this issue is the key to resolve the debate on whether monetary policies should respond to asset prices.Now the researchers are focusing on the relations between stock price and inflation or monetary policy and the relations between the house price and inflation or monetary policy.The possible innovation of the paper lies in that the article studies the relationship between stock price,house price and the macro-economics.The article use theoretical analysis and demonstration research to analyze the problem and use the cointegration theory which is contrived by Granger and Engle to analyze the relationship of stock price SDEX,house price HPI and CPI, GDP, money supply M2,and Rate by use of essentials of econometrics'software Eviews 5.0 edition, and then elicited the VECM to forecast the data, the forecast data validate the good fitting of the model. At last, make use of impulse response function theory and variance decomposition theory to analyze the meaning of model, and elicit the conclusion.And then the suggestions are given basing on the conclusion so as to solve the validity of the monetary policy.