House Prices,Monetary Policy And Economic Fluctuation

China’s real estate market develop rapidly since 1998,but also lead to prices rising fast.In view of this situation, central bank introduced a number of policies to stabilize house prices,But the house prices are still rising rapidly.How should the central bank regulate the price of real estate and maintain economic growth?What is the relationship between monetary policy and macroeconomic volatility?Most of researchers use the traditional econometric analysis methods.In this article, we use a dynamic stochastic general equilibrium (DSGE) model to study the impact of exogenous shocks on macroeconomic,and discuss the choice of China’s currency monetary policy.In this paper, we introduces heterogeneity families,sticky prices,credit constraints and real estate to build a DSGE model which contains several shocks.We study the impact of exogenous shocks on the economy by analyzing the pulse response function and compared the effect of different monetary policy when exogenous shocks occur. Conclusions are as follows:1.When the real estate demand shock occurs, monetary policy which respond to the house prices has better regulatory effect,but also need to pay a certain cost.2.The expectation shock will produce effects of credit expansion, monetary policy which respond to the house prices has better regulatory effect,but also need to pay a certain cost,such as long-term rise in inflation and output, consumption decline in the short-term.3.When the central bank’s monetary policy shocks occur,monetary policy which respond to the house prices has Longer-term effects and the decline in output, investment, real estate prices and consumption is relatively small.it is possible to reduce the volatility of monetary policy shocks.4. Down payment ratio Policy had better inhibitory effect on house prices caused by expectation shock and weak effect on house prices caused by preference shock. While the use of the two policies can achieve better control prices and stabilize the economy.In summary,monetary policy which respond to the real estate prices can help to achieve the goal of maintaining macroeconomic stability.So The central bank should weigh the costs and benefits of monetary policy in accordance with the current economic situation.