| At the end of the 20th century,the State Council promulgated the "Notice on Further Deepening the Reform of the Urban Housing System and Speeding up Housing Construction" to explicitly stop the housing allocation system.The "House Reform Notice"marked the beginning of the housing commercialization reform and kicked off the vigorous development of China’s real estate industry.In the 20 years since then,the real estate industry has gone through alternating phases of rapid development,overheated development,and cooling regulation.In 2003,the State Council promulgated the "Notice on Promoting the Sustainable and Healthy Development of the Real Estate Market",which proposed to regard the real estate industry as a pillar industry of the national economy.Nowadays,real estate has become an important industry in China’s national economic development,playing a pivotal role in promoting consumption,expanding domestic demand,boosting investment growth and maintaining the sustainable and healthy development of the national economy.As one of the key points,real estate prices have become an important influencing factor for resource allocation.However,since the marketization of China’s real estate industry,prices have continued to climb,and its excessive rise will not only aggravate the current structural contradictions in the economy,but also adversely affect residents’ consumption and enterprises’ investment,and may even accumulate financial risks and trigger financial crises.The government’s attitude toward the real estate market changed from initial support to stabilization,adjustment and cooling.In the following decade,the government introduced the "Article 4 of the State Council","Article 10 of the State Council","New Article 8 of the State Council" and other regulatory policies,but still failed to curb the trend of excessive price increases.China’s macroeconomic response to the real estate market has become increasingly sensitive,as a downturn in the real estate market can exacerbate the risk of economic downturn,and an overheating can exacerbate the risk of the bursting of the housing bubble and the impact on the financial market.The real estate market boom or bust can affect the achievement of monetary policy objectives.Existing research suggests that monetary policy regulation has a significant impact on real estate prices,but it is not clear whether monetary policy regulation should focus on real estate price itself or on house price growth or house price volatility,but in any case,both price-based and quantity-based monetary policy instruments ultimately affect real estate prices.In this paper,we study whether monetary policy has an"indirect response" to the price of real estate as an asset in China,based on the context of monetary policy on house price regulation.If so,what should be the response of monetary policy to house price fluctuations or house price growth rates?What are the characteristics of the monetary policy stance and the intensity of monetary policy regulation reflected by this response?Therefore,this paper is of great practical significance to improve the indirect regulation framework of monetary policy on real estate prices in China,including the setting of regulatory targets,the forward-looking regulatory policies,the expected regulatory target range,the coordination of regulatory tools and regulatory policies,etc.In addition to the introduction and conclusion and policy recommendations,the paper is divided into four chapters:Chapter 2 constructs the theoretical basis for monetary policy’s regulation of real estate prices.Firstly,real estate prices can affect inflation and output through the wealth channel,the credit channel,and the expectations channel.Therefore,monetary policy is directly concerned with key economic variables such as inflation and output gap,and should also be indirectly concerned with real estate prices.However,the control and regulation of real estate prices itself is not the goal of monetary policy,and monetary authorities should incorporate asset price fluctuations into the monetary policy response function,that is,the"indirect reflection view" of monetary policy.Secondly,real estate prices can be decomposed into two parts,one is the fundamental real estate prices and the other is the non-fundamental real estate prices,while house price misalignment can better reflect the influence of non-fundamental factors in the process of real estate price formation.The mechanism and effect of house price misalignment on house prices can be divided into capital flow effect,interest rate credit effect and wealth effect.On the other hand,real estate prices as asset prices also have inertia,and the influence mechanism and effect of house price inertia on house prices are mainly reflected in market expectation effect,wealth effect and cost push effect.Therefore,real estate prices can be further decomposed into three parts,one part is fundamental house prices,one part is house price misalignment,and one part is house price inertia,where house price misalignment is distinguished into rational expectation house price misalignment and adaptive expectation house price misalignment.According to the "indirect reaction view" of monetary policy,monetary policy reacts to the deviation of house prices from the equilibrium house prices,then monetary policy on real estate price regulation is reflected in the response of monetary policy tools to house price misalignment and house price inertia.Chapter 3 focuses on the analysis of the characteristics and development stages of China’s real estate price changes,the time-varying characteristics of China’s monetary policy stance at different stages of real estate development,and the asymmetric characteristics of the intensity of China’s monetary policy regulation at the stage of rising and falling real estate prices.China’s real estate development has gone through six stages:real estate reform period,real estate rapid development period,real estate temporary fall period,real estate tightening regulation period,real estate inventory digestion period,and real estate full regulation period.By comparing the price and quantity-based monetary policy regulation paths,monetary policy stance and effects in different stages of China’s real estate development,it is found that in the six stages of real estate development,China’s monetary policy has gone.through the process of loosening-tightening-looseningtightening-loosening-tightening,and the stance of monetary policy on real estate regulation is not time-invariant.On the other hand,China’s real estate prices show stages of decline and rise,and the adjustment of China’s monetary policy on real estate prices will be asymmetric due to the rise or fall of house prices,and monetary policy will be more intense in regulating the falling stage of house prices and less intense in regulating the rising stage of house prices.Chapter 4 empirically analyzes the time-varying effects of price monetary policy instruments and quantitative monetary policy instruments on the nonlinear responses to expected house price misalignment and house price inertia based on a time-varying perspective.In terms of the time-varying effects of the price-based monetary policy instruments represented by interest rates on house price misalignment and house price inertia,China’s price-based monetary policy is changing from a "direct response" to an"indirect response",but regardless of the response,China’s price-based monetary policy instruments are less forward-looking and more reactive in backward-looking.In terms of the time-varying effects of quantitative monetary policy tools represented by monetary growth on house price misalignment and house price inertia,the "direct response" of China’s monetary policy to key economic variables is shifting from mainly quantitative monetary policy tools to mainly price-based monetary policy tools,and quantitative monetary policy tools have a strong indirect response to real estate prices.The indirect response of quantitative monetary policy instruments to real estate prices is strong,but the forward-looking one is weak,and the reactive one is strong,and there are preferences for expected house price misalignment and house price inertia,but the reactive response and single stabilization preference for expected house price misalignment and house price inertia are not conducive to stabilizing house prices and house price expectations,whether in the narrow or broad sense of quantitative monetary policy instruments.Thus,it is important to both improve the forward-looking nature of the regulation of our quantitative monetary policy instruments and to coordinate the regulation of narrow and broad quantitative monetary policy instruments.Chapter 5 empirically analyzes the regime switching effects of price-based monetary policy instruments and quantitative monetary policy instruments on the nonlinear responses to expected house price misalignment and house price inertia based on the regime switching perspective.In terms of the regime switching effect of price-based monetary policy instruments,represented by interest rates,on the nonlinear responses to house price misalignment and house price inertia,China’s price-based monetary policy is changing from a "direct response" to an "indirect response".The indirect response of price-based monetary policy instruments to real estate prices is gradually increasing,and this indirect response is non-linear and asymmetric,with the non-linear response having a significant regime switching effect between high and low zones,while the asymmetry is reflected in the fact that price-based monetary policy instruments have a greater regulatory effort in the phase of falling house prices and a smaller regulatory effort in the phase of rising house prices.In terms of the regime switching effect of the nonlinear response of price-based monetary policy instruments to house price misalignment and house price inertia represented by money growth,the indirect response of China’s quantitative monetary policy instruments to real estate prices is stronger,and this indirect response is nonlinear and asymmetric,and the nonlinear response has a regime switching effect of relatively high zone-based versus relatively low zone-based.However,there is some degree of difference in the relative zone-shift effects of the nonlinear responses of narrow versus broad quantitative monetary policy instruments,so the regulation of narrow and broad quantitative monetary policy instruments should be coordinated for the difference in the relative zone-shift between the declining and rising phases of house prices corresponding to the relatively high and relatively low zone-based regimes. |
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