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Research On The Impact Of Money Supply On China’s Real Estate Prices

Posted on:2014-08-18Degree:MasterType:Thesis
Country:ChinaCandidate:C J WenFull Text:PDF
GTID:2269330422955835Subject:International Trade
Abstract/Summary:PDF Full Text Request
Real estate as a “second financial industry” plays an important role in theeconomic development in China. The real estate market develops rapidly, and thedegree of market improves continuously. But China’s price earnings ratio is too high,which brings a serious burden to the residents who want to buy houses. There is acertain amount of foam in the real estate market, once the real estate bubble bursts,our country will likely copy the economic and financial crisis in Japan and SoutheastAsia. The reasons are complex on causing the skyrocketing real estate prices, and thecountry is also continuing to adopt a variety of policies to regulate the real estatemarket, but the effect is not obvious, the situation of the high real estate prices are stillnot fundamental improved.One of the means of state regulation of prices is a monetary policy tool amongwhich the important means to achieve the objectives of monetary policy is bychanging the money supply. This article is also based on the idea and discusses theimpact of money supply on the real estate prices theoretically, analysis the mechanismof money supply affect the real estate market through different channels. This articlebases currency structure perspective on money supply, which is accordance with threelevels on our current money supply to examine the impact of various levels of moneysupply on the price, at the same time discuss their different effects on the price of ahorizontal comparison. Select the monthly data from January2001to December2011,using the vector autoregressive and vector error correction model to study the impactof various levels of money supply on the price. The results show that M2is alwaysimpact on house prices positively, and the impact on house prices is bigger comparedM1and M0, while the impact on the prices remained the same between M0and M1.There is a time lag on the effect of all levels of the money supply to real estate prices,,but the time lag is different. From the perspective of cointegration test andcointegration equation, there is long-term stable relationship between all levels ofmoney supply and real estate prices. The impact on M2to house prices is greater, thecoefficient reaches0.8406. The impact on M1to house prices is relatively smaller thanM2but its elasticity coefficient reaches0.5942. The impact on M0to house prices isthe smallest among M2, M1and M0, but in the long run elasticity coefficient of M0tothe house prices reaches0.5573almost the same with M1. The long term, there isGranger sense causality on house prices to all levels of the money supply. Various levels of money supply prices are the Granger reasons to house prices in the long term.However, in the short term M0is not Granger cause to price changes, house prices arenot the Granger reason to M2, M1. Finally, explain the reasons for such conclusionsand give some policy recommendations.
Keywords/Search Tags:money supply, Vector Autoregressive Model, Vector Error Correction
PDF Full Text Request
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