Research On U.S. Monetary Policy Spillover Effects On China’s Real Estate Prices

The Real estate prices in China has been suffering a continuous growth in recent years, which has serious effects on the stability of people’s daily life as well as the integrity of national financial system. Although the excessively high housing prices have been studied by many domestic scholars, the majority of these researches are barely based on the factors within China. With the development of globalization and under the open economic environment, the influence of international factors on the Real estate prices of China is getting more and more obvious. The aim of this dissertation is to study the influence of monetary policies from the United States on the spillover effects of the Real estate prices in China.The basic theories on spillover effects of the monetary policy are reviewed at the beginning, which include two major models of M-F-D model and NOEM model. Following this review, the existence and extent of the influences from the U.S. monetary policies on the spillover effects of Chinese Real estate prices are empirically analysed by VAR model. The index of Chinese Real estate prices and the U.S. FFR are selected as variables and the monthly data of them from January2001to December2011are fitted within the VAR model. The empirical analysis result reveals that U.S. monetary policies have noticeable spillover effects on Chinese Real estate prices.Based upon the combination of both the fundamental mechanisms of spillover effects from U.S. monetary policies in the open economic environment and applied empirical analysis, corresponding routes of how U.S. monetary policies spill the Chinese Real estate prices are qualitative analysed in this dissertation. The study indicates that there are two major routes to spill the Real estate prices in China, which are policy channel and asset price channel, respectively.This dissertation is summarized in the end and related policy suggestions are proposed on current situation of Chinese real estate market, aiming to promote a healthy and stable development.