Study On The Impact Of China’s Real Estate Industry On Macroeconomy Based On Panel Data

Real estate is not only an important source of revenue for the government, but also ofgreat importance to promote China’s economic growth as well as the enhancement ofdomestic demand. Based on the annual panel data of31provinces in China from1995to2010and finished unit root test, cointegration test on panel data of three realestate development indicators, i.e., construction of the actual investment amount, theactual average price of real estate, the actual area of real estate sales and the annualGDP of the provinces, the author tries to reveal the long-term equilibrium betweenreal estate industry and GDP. In order to explore whether the volatility of the realestate industry could impact GDP in long-term and calculate the contribution ratio,the author also analyzes the panel data by using the method of impulse responsefunction and variance decomposition. The results show that, firstly, the real estateindustry plays a positive role on promoting China’s economic growth in the long run.Secondly, the impulse of actual investment amount would pose positive effect onChina’s economy, while the impulse of actual average price of real estate would putnegative effect. Meanwhile, when there is a positive impulse to actual sales area, theimpulse would bring negative effect on China’s GDP in the first term, but would turnpositive after the second. Thirdly, real estate industry contributes a lot on theeconomic fluctuations. More specifically, all the three indicators have impact on theeconomic fluctuations and the volatility of actual investment amount impacts mostlyand the actual average price least. Finally, based on the findings between real estateindustry and economic development, the author gives rational advice to the authorityon how to correctly guide the development of the real estate industry.