| China’s rising real estate prices is concerned by people of all walks of life since the second half of2003. This article discusses the effectiveness of the monetary policy in regulating China real estate prices through theoretical analysis and empirical research.The article introduces the development status of China’s real estate market, points out that moetary policy regulation is needed. We establishes the transmission mechanism between monetary policy and real estate price which involves the main indicators of money supply, the size of credit and lending interest rates and is divided into monetary channel and the credit channel.By analyzing the economic indicators and control policies over the years, we find on one hand the real state price is pushed by monetary policy as money supply, the size of loans and lending rates, on the other hand the central bank is also trying to be able to effectively control prices by adjusting those indicators. Generally speaking, the monetary policy and real estate price are closely related. On the basis of theoretical analysis, the paper uses a vector autoregression model (vector autoregression, VAR) empirical analysis to verify the dynamic process of the money channel and the credit channel. The empirical results show that the credit channel transfer data faster, more efficient and more forceful compared with the monetary channel when judged by real estate price growth rate. It means it’s not that effective to control real estate price by means of general monetary policy regulation in short term, because the total money amount has weak pertinence and long time lag; and the use of selective monetary policy to a certain extent solve the housing bubble problem. It needs to be noted that selective monetary policy will work only when the total policy tightening and actively cooperate with relevant departments. Finally, combined with China’s actual situation, the paper comes up with targeted policy recommendations from central bank side. |
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