Effect Analysis of Real Estate Price and Monetary Policy: An Empirical Study Based on China Macroeconomic Data

Abstract

Since the reform of the housing system in 1998, China's real estate market has been gradually marketized. A large number of demand-side purchases that were suppressed by the planned economy were released. The rapidly rising real estate prices affected the People's Bank of China's monetary policy through Tobin's Q and the financial accelerator. This paper establishes a VAR model to analyze the policy factors and find out “land finance” has promoted the rise of real estate prices to a certain extent and the regulation of the real estate market lags behind; real estate prices can interfere with the effect of monetary policy which rising real estate prices increase the uncertainty of monetary policy. Finally, this paper puts forward policy suggestions of the monetary policy and local fiscal revenue.