The Impact Of Monetary Policy On Housing Prices From The Perspective Of Regional Differences

In 1998,China changed the way of housing allocation that had been implemented for many years,pushed forward the process of housing commercialization,and began to step into the phase of housing marketization.Since then,the development of real estate and its related industries has made remarkable progress,gradually being a pillar industry of national economy and people’s livelihood.Over the past decade,however,the influx of foreign and domestic capital in real estate market has not only created a scene of prosperity with employment,consumption and investment growing rapidly at the same time,but also brought a lot of incvasiblc problems in the economic development of our country,including the rapid rise in property prices,which have raised concerns about the property bubble,and overpriced housing,which is aggravating the burden of the people and intensifying social contradictions.Therefore,the regulation of this market has become an important issue that all levels of governments have to face and focus on.Monetary policy is the management of the money supply and interest rates,referring to the combination of the policies and means that a national monetary authorities,in China which is the people’s bank of China,would use monetary policy tools to effect national economic,in order to achieve a specific macroeconomic goals.In reality,the monetary policy is an important means of macroeconomic regulation and control.And it has played a key role in Chinese government’s real estate market regulation,cracking down on speculation of the market,inhibiting the growth of the bubble,and then ensuring the development of the market stable,orderly and healthy.In 2007,for example,the people’s bank of China tightened the money supply,raised the reserve requirement 10 times and raised the benchmark interest rate six times within the whole year,in order to solve the explosion of house prices in China.However,from the perspective of the whole country,the effect of monetary policy is obviously differentiated between regions.The reason is that Chinese real estate market has obviously showed regional differences.China has a vast territory.Due to the differences in the geography,the humanities,and the degree of opening time between regions,they have showed differences in scale,structure,and trend in all aspects of economic development.Combined with the integral and immovable character of the housing itself,it is no surprise that the real estate market shows the obvious regional difference.According to the definition and evaluation criterion of "optimum currency area",it is this difference that made the regulation effects of monetary policies different.Therefore,it is necessary to study the effect of monetary policy on the price of commodity house in different regions.Based on the above situation,this paper attempts to study the different effects of monetary policy on the impact of house prices in different regions,and analyzes the influence mechanism and the effects of this problem,through theoretical and empirical models.Unlike previous studies,this paper studies regional house prices problem by decomposing the prices of commercial housing to get the prices of basic value and foam composition,and analyzing the two parts,which could make the research more detailed and targeted.For such consideration,this article will at first introduce the transmission mechanism of monetary policy and the representative theory.It will also analyze the present situation of China’s real estate market and review the process of using monetary policy regulation.And then it will select the appropriate data for empirical research.At last,according to the empirical results,it will propose some policies.The detailed structure of the article is as follows:This article is divided into five chapters.The first chapter is the introduction.This chapter starts with expounding the research background and meaning.This chapter summarizes the research situation at home and abroad,analyzes the advantages and disadvantages of the paper,then introduces the ideas and methods of this paper,and concludes the innovation and defects that may exist in the article.The second chapter elaborates on the theoretical basis of the full text,which analyzes the theoretical issues involved in the empirical research,and constructs the theoretical framework of this paper.First of all,it explains the theory of real estate bubbles and the harm of the bubble economy.Secondly,the article introduces the transmission mechanism by which monetary policy can affect house prices.On this basis,the last part analyzes the factors that affect the regional impact of monetary policy.The third chapter is analysis of the fact.First of all,it is a review of the process of monetary policy adjustment undertaken by the authorizes in different stages of the market since 1998.And then it analyzes the impact of monetary policy on housing prices,and stales the typical fact of regional differences in the effect of monetary policy.At last,the paper uses data to analyze the reasons for the regional differences.The fourth chapter is empirical research.The article firstly selects nine indicators in 2015 from China’s 30 provincial-level administrative regions,except Tibet,in order to divide the 30 regions into three ones,which have the differences in the development of economic,financial and real estate market.On the basis of the monthly data of three regions from February 2001 to December 2001,this article uses price analytic method to decomposing the housing price,getting the basic value and bubble component of housing prices.Using the data obtained,it respectively discusses the monetary policy effect of the two prices in each region,that is based on the VAR model and the generalized impulse response function.Finally,this paper analyzes the reasons for the different responses in different regions to the Unified monetary policy.Chapter five is the conclusion and policy suggestion.Based on the empirical results,this paper puts forward some policy suggestions,concerning the formulation and implementation of monetary policy and the innovation of financial market.