Research On The Effect Of Macro-control Policies On Prevention Of Financial Risks

Since the housing commercialization reform in 1998,China's real estate market has developed a lot,and the real estate industry has gradually become one of the important pillars of China's economy.However,because the development of China's economy relied too much on the real estate industry in the past,the inflow of a large amount of capital caused house price to rise rapidly and stay high for a long time.This phenomenon not only impaired the consumption capacity of residents and restrained the healthy development of other industries,but also might lead to real estate bubble.The "subprime crisis" in 2007 fully showed that the rapid rise and the drastic fluctuation of house price is a serious threat to financial security and economic stability.How to maintain the stability of house price and control the real estate market effectively with macroeconomic policies has become an important issue to be studied urgently.This paper introduces monetary policy,fiscal policy and macro-prudential policy,and constructs a dynamic stochastic general equilibrium model,which includes household sector,real estate producer,consumer goods producer,capital goods producer,commercial bank and authorities.By using this model,the paper analyzes the role of monetary policy,fiscal policy and macro-prudential policy in controlling economy and real estate market risk.Furthermore,this paper also discusses the different effects of different policies,which have different policy rules,and different policy combinations,which are combined with different policies,on reducing the impact of exogenous shocks on the real estate market.Some conclusions are drawn.Firstly,the regressive real estate production technology leads to the rapid rise of house price in long term,and the financial shock leads to the modest rise of house price in short term.Secondly,in terms of controlling economy,the fiscal policy of targeted at land price,which is the most useful,can achieve good control of house price,inflation and leverage ratio.The tightening monetary policy,which is second-best,can control house price and the total social leverage ratio.The effects of tightening macro-prudential policies and tax policy are not obvious.Thirdly,policies which have different forms of rules have different impacts.Among them,the monetary policy targeted at loan has stronger effects on economy,while the monetary policy targeted at house price plays a better role in automatically calming economic fluctuations caused by exogenous shocks.And,compared to the general fiscal policy,the fiscal policy targeted at the change of house price has different effects on house price,inflation and leverage ratio.Finally,macroprudential policy is the key to prevent the risk of real estate bubble,and the different policy combinations have different effects on controlling the negative effects of exogenous shocks.The policy combination,which includes the monetary policy targeted at house price,the fiscal policy targeted at house price and the macroprudential policy,has a better control on the negative effects of technology retrogression.The policy combination,which includes the monetary policy targeted at loan,the general fiscal policy and the macro-prudential policy,has a better control on the negative effects of financial shock.In the end,this paper provides some suggestions.Firstly,authorities should try to identify the main reasons for the rise of house price and choose macroeconomic policies accordingly.Secondly,according to present situation in China,tax reduction may be the best choice in order to achieve the goal of stabilizing leverage ratio.Thirdly,at present,the policy combination,which includes the monetary policy targeted at loan,the general fiscal policy and the macro-prudential policy,is the most appropriate policy combination and should be applied by central bank and ministry of finance,in order to stabilize house price.