Research On The Impacts Of Interest Rates On Consumption

For nearly three decades, the real estate markets in many countries have swung volatility, and the impact on the economy seems to be increasingly significant. Japan’s housing bubble burst in 1980 s,together with the US subprime crisis in 2007 have caused profound influence to the domestic and global economy, especially to the consumption. Since the housing commercialization reform in 1998, real estate in China has shown a rapid development. In view of this, this paper studies the real estate prices channel of interest affecting consumption has some significance.In this paper, the study involves theoretical and empirical analysis. In the theoretical analysis, the pathway is divided into two stages: The first stage, the interest rate on real estate prices conduction; The second stage, real estate prices on consumption. In the empirical part, we established a SVAR model with the variables of CPI, the total retail sales of social consumer goods, CHIBOR and the average residential sales price using the data from 1999Q1 to 2014Q2, in order to estimate the dynamic effects of the supply shock, the demand shock, the interest rates shock as well as the real estate price shock.Through the analysis, the following main conclusions were drawn: The real estate prices channel of interest affecting consumer exists; In the first stage, there is a negative correlation between interest rates and real estate prices; In the second stage there is a significant positive correlation between real estate prices and consumer; In the process of interest affects the consumer, the real estate price channel transmitting 50% of the effect, the real estate market plays an important role in the process of interest affect the consumer.In the end, this paper make some policy recommendations to improve the impact of the real estate prices channel of interest affecting consumption: First, continue to promote the interest rate market-oriented reforms; Second, standardize the behavior of market participants; Third, stimulate consumption reasonable.