The Spillover Effect Of U.S. Quantitative Easing Policy On China’s Real Estate Investment

Since the strong international influence of U.S. quantitative easing policy and the importance of real estate industry in China’s economic development. This paper uses vector autoregression (VAR) model to study the spillover effect of U.S. quantitative easing policy on China’s real estate investment. The empirical result shows that quantitative easing policy indirectly affect China’s real estate investment through the channel of the two countries’monetary policies’mutual effect. This also conforms with the "Impossible Trinity" theory. Based on the empirical result, the paper comes up with some policy recommendations for China like using some comprehensive monetary tools, loosening its mild-tight monetary policy after quantitative easing tapering, using fiscal policies or land policies in real estate market to offset the passive effect from monetary approach. In the long term, RMB’s internationalization is important.