Analysis Of The Impact Of Monetary Policy On Housing Price Fluctuation In China

Problem of the relationship between monetary policy and asset prices is widely concerned by scholars all over the world. The purpose of this paper is to investigate the mechanism and effects of China’s monetary policy on housing price fluctuation. Based on the first quarter of 2000 to the second quarter of 2014 China’s real output, inflation rate, nominal interest rates, real house prices, money supply and credit data, we summarize some empirical facts in price fluctuations to provide modeling reference and evaluation criteria.Subsequently, we construct a DSGE model with heterogeneous households(savings and borrowings), corporate sector, retail, commercial banks and central bank. Solve the model to get the first order conditions and logarithmic linear to get linear model. Some parameters obtained by calibration, and other parameters are estimated using the Bayesian technique based on data of real output, inflation rate, nominal interest rates, real house prices, deposits and credit. We evaluate models by comparing the actual economic and the economy of simulation.This paper finds that the financial friction effect of real estate mortgage lending is significant. Then, through the introduction of real estate demand, technology, cost, interest rates, reserve ratio and the borrowing household credit six kinds of shocks, compared with and without mortgage lending model to observe the real estate market financial friction phenomenon. we find that there are two forms of financial friction: one is the financial accelerator effect in the presence of the real estate as collateral, that is to say, the main economic variables fluctuation are more significant in the case of with real estate mortgage. The second, the real estate as an important asset, wealth effect in real estate mortgage lending is more obvious. We prove that the financial accelerator effect of real estate mortgage lending and more remarkable wealth effect is the internal mechanism of housing price fluctuation.Then this paper analyzes the impact of monetary policy(general monetary policy tool, interest rates and reserve ratio and the selective monetary policy tools, credit control policy) on price fluctuations in mortgage lending benchmark model. The impulse response function of tightening monetary policy(increase of reserve ratio or interest rates) will lead to price fluctuations of the initial negative deviation, at the same time, the loose monetary policy will lead to price fluctuations of the positive deviation. Variance decomposition results show that: the main source of price fluctuations are demand and cost factors. Credit, reserve ratio and interest rates and other monetary factors is relatively small. However, we also found that, when the variance of borrowing households credit shock amplification, price fluctuations will be amplified exponential.Finally, we summarize the research conclusions and possible enlightenment.