Monetary Policy And Real Estate Bubble

In recent years, the real estate of China has been very active, the property prices have kept rising, and caused much attention from the decision-makers and academics. There are also a lot of arguments on the causes for the abnormally high real estate prices. From the perspective of monetary policy, this paper focuses on the major policy objectives of monetary policy and the link with fluctuations of real estate prices. It exposes the role of monetary policy in the formation process of the real estate bubble from three aspects of economic growth, stable prices and balance of payments. The central issue is "the monetary policy which concerns only with the traditional objectives will probably led to the abnormal rise even bubble in the real estate prices". On the basis of theoretical studies, this paper mainly inspects the experience of bubble economy and the financial crisis which happened in some Asian countries since 1980s, especially the real estate bubble in Japan's "Ping Cheng boom" in the late 1980s and in Thailand in Asian financial crisis. Furthermore, we research the history and current situation of China's real estate price fluctuations, especially the real estate bubble since 2002. In the end, we analysis the reasons of bubble from monetary policy, and put forward some thinking and recommendations in order to strengthen the effect of the monetary policy.