Research On The Relationship Between Fluctuations Of Real Estate Prices And Inflation In China

With the development of the global economy, capital markets and real economy is increasingly linked to each other. Real estate influences all aspects and plays an important part in the capital market, which is closely linked to inflation. In this context, this thesis focuses on the relationship between the fluctuations of real estate prices and inflation, and attempts to explain and clarify the interaction mechanism of this relationship.On the basis of economics models and theories, the thesis analysed the relationship between the fluctuation of real estate prices and inflation under the actual situation in China. The results showed that the effective impact which inflation due to the fluctuation of real estate prices worked by influencing the supply and demand in the real estate market. Through the wealth effect, substitution effect, and Tobin’s Q effect, the fluctuation of real estate prices also influenced inflation effctively. Then the thesis selected the2001-2011monthly indicators and made the empirical test, including cointegration test, Granger causality analysis, to test the internal logical relationship between them. Then the thesis established the VAR model and impulse response function, combined with the equation of decomposition, to test the response after a shock to the system. The results proved the real estate price fluctuations Granger due to inflation, and the other impact was also significant. Finally, the regression equation tested other variable how to influence the fluctuation of real estate prices and inflation.At the end of this thesis, according to the conclusion, and combined with the current reality of our country and government regulation, the thesis presents the policy recommendations.