The Impact Of The Real Estate Investment On Economic Growth

Because of the intimate relationship between the real estate market and the economy, the government is trying to figure out effective regulation policies to keep the economic growth while ensuring the real estate market stable. Though currently our country is enjoying the rapid wealth expansion brought by the prosperous real estate market, the real estate bubble is accumulating at the same time and several short-term regulation policies seemed to be useless to slow down the velocity of the bubble accumulation.Under this background, our paper attempted to investigate the impact of the real estate investment on the economic growth and the mechanism of this influence by empirical study. We also tried to figure out the difference of this influence in different regions. Our study not only fills up the gaps in both the empirical study of the influence mechanism and the region-based comparison study of this influence, but also contributes to framing long-term effective regulation policies.Our paper applied an empirical study based on the multiple linear regression to the panel data obtained from28provinces and cities inbetween2001and2008. First, we measured the influence coefficient of the real estate investment on the economic growth. Then based on the input-output model, we figured out the mechanism of the industrial linkage effect between the real estate investment and the economic growth. Finally, we showed the differences of the influence coefficient under two comparison models, one compared the eastern, middle, and western China and the other one compared the28provinces and cities.The empirical study showed that in our country the real estate investment has long-term positive contribution to the economic growth and the current influence coefficient is0.3035. In particular, this contribution is achieved by many industrial linkages, especially the retail trade, building trade, financial circles, etc.. Geographically, the influence coefficient in eastern China is much larger than that in both middle and western China while the influence coefficients are similar in the later two regions. Comparing the rich coastal areas with the hinterland regions, the elastic coefficient of this influence in former regions is much larger. Based on the above theoretical analysis and empirical study, we proposed several real estate regulation policies and several inadequacies in the paper.