Exchange Rate Analysis Of Real Estate Price Transmission Paths In Japan And China

In recent years, along with China’s rapid economic development and the increasing appreciation of the RMB exchange rate, the real estate prices in China also experienced a sustained rise. Even experienced severe macro-control for up to three or four years, the strong rising momentum of housing price did not seem to cool down. This paper explored the effect of exchange rate passing on real estate prices from the expect effect, the wealth effect and the liquidity effect to study the impact and transmission mode of the exchange rate passing on the real estate price. The author believed that, in the first stage of the exchange rate pass-to to intermediate variables such as foreign exchange reserves, the gross national product, and currency supply, foreign exchange reserves on behalf of the expected effect plays a major role. In the second stage of the intermediate variable conduction to the prices, the wealth effect is most significant in Japan and the liquidity effect is most significant in China.This paper is divided into five parts.The first chapter of the paper describes the background&significance of this study, the research structure, emphasis and difficulty as well as innovation and inadequate. The second chapter is a literature review section on the exchange rate pass-on to price transmission theory, the exchange rate incompletely transferring theory, the exchange rate transmission mechanism, the impact of exchange rates pass-on to asset prices as well as the Japanese real estate bubble. In chapter3, the author firstly proposed this article’s core theory:exchange rate pass-on to real estate prices through the expect effect, the wealth effect and the liquidity effect this three paths, then analyzed Japan and China’s actual situation using the theory above. In chapter4, the author took advantage of the real effective exchange rate, the land price index, foreign exchange reserves, GDP and money supply data on Japan and China in empirical study which Japan used annual data, and China used quarterly data. The empirical analysis include:data analysis, stationarity test, cointegration test, Granger causality test, regression analysis, pulse analysis and variance decomposition. The empirical results of Japan and China are explained and analyzed later. In chapter5, with the foregoing studies and empirical results, the author thinks in the exchange rate pass-on to the price three paths, Japan’s wealth effect is most significant while our liquidity effect is most noticeable.Against the actual situation in China, the author also gavesome feasible suggestions on the exchange rate regime and real estate price control.