China's Monetary Policy On Real Estate Price Effect Of Regional Differences

Since the housing currency reform in China in1998, real estate industry has developed rapidly, and the national real estate price is rising fastly. The state implement a series of measures on the real estate industry, but the effect is not ideal. As the capital-intensive industry, the validity of monetary policy in regulating and controlling real estate price has attracted much attention in academe.Real estate is typically regional, so there are significant difference in the structure of demand and degree of development. Meanwhile, China is currently in economic transition, the regional economy and finance development are extremly imbalanced in China. Therefore, there are regional difference of unified monetary policy effect on real estate prices, the regional difference will weaken the overall validity of monetary policy in regulating and controlling real estate through local constraints on the overall role, and will go against the coordinated development of the regional real estate market. To make researches on regional difference of monetary policy effect on real estate price can help to understand the regional characteristics when monetary policy transmits to real estate prices, to take combinations of policy tools that give full play to regional comparative advantages to affect real estate prices effectively.Firstly, in this paper, we analyze some correlation theories about the contents of China’s monetary policy and transmission mechanism, the regional difference of monetary policy effect and the pathways that monetary policy influence real estate price.Secondly, we select the city of Shanghai in the eastern region which is highly marketizational and the city of Changsha in the central region which bears the important task of "Rising of central China" as two study objects, we confirm that real estate is apparently regional. Then, we analyze the reasons why the effect of monetary policy on real estate prices is regionally different.Thirdly, on the basis of theoretical analysis, we demonstrate the impact and lags of China’monetary policy to real estate price in Shanghai and Changsha. After that, we compare the empirical results. The empirical results showed that:one side there is obviously regional difference of unified monetary policy effect on real estate price, the impact to the real estate price in Shanghai is more significantly than Changsha. On the other hand, monetary policy can affect real estate prices with Time-Delay.Finally, on the basis of theoretical analysis and empirical analysis, we propose some policy suggestions about establishing a national unity monetary policy system combined regional difference, and using other means to improve the real estate market. I make an attempt to provide theoretical and practical support for raising effectiveness of monetary policy, improving the coordinated development of regional real estate market.