Empirical Study On Interaction Between Monetary Policy, Macro-economy And Housing Price In China Focusing On General Perspective And Regional Difference

There is a complex relationship between monetary policy, macroeconomics and housing prices. Through the transmission of rate and credit, monetary policy can act on housing price. Meanwhile, housing price fluctuations would reflect the effect of monetary policy transmission. Housing price can influence the total expenditure and output of the whole society through its impact on both businesses and resident’s consumption and investment, so as to act on macroeconomic. In response, on one hand fluctuations in general economic conditions have impact on housing price, on the other hand monetary policy varies with macroeconomic. Deep exploration of relations between the three contributes to a better understanding of the law of housing price fluctuations and responses of macroeconomic, to a better understanding of the whole system composed of monetary policy, housing price and macroeconomic. In addition, it’s new for this paper to do an empirical analysis of regional difference of this interaction, which will make up the lack of regional empirical evidence in the past studies.With the purposes above, this paper first analyses the essential feature of monetary policy, housing price and macroeconomic in China. Afterwards, in order to explain the varies in macroeconomic caused by monetary and housing price, we conduct studies of both national and regional interaction mechanism. Firstly, choose a national monthly data from 2004 to 2013, use VAR economic model to analyze the interaction between monetary policy, macroeconomic and housing price in China, the empirical research shows:(1) housing price in short term can reflect its future level; (2) there exists interaction relationship between housing price and GDP meanwhile there exists interaction relationship between housing price and money supply; (3) money supply has continuous impact on housing price. On the basis of national empirical research, this paper takes a further regional research, selecting Hangzhou and Chengdu as study area, to explore the regional difference of interaction mechanism. Regional empirical research finds out:(1) interaction exists both in Hangzhou and Chengdu, which is more intense in Hangzhou; (2) in the interaction between housing price and regional economic, it is of more significance the impact GDP has on housing price in Hangzhou than in Chengdu; (3) monetary policy does interacts with regional economic both in Hangzhou and Chengdu.This paper comes to a conclusion that there is interaction with regional difference, between monetary policy, housing price and macroeconomics. Thus, policy makers should fully understand and grasp the interaction mechanism between monetary policy, housing price and macroeconomics. On the basis of housing price stability, policy makers can make proper policies to promote the steady growth of macroeconomic. Also, regional difference would be taken full account of when making policies.