The Differential Regional Effects Of China’s Monetary Policy On Real Estate Price

Since1998, China’s real estate industry has been developing rapidly, which has effectively promoted sustainable and rapid development of China’s economy. But in recent years, real estate price soared violently, and the high real estate price has exceeded the bearing range and purchasing power of many ordinary-income families. The development of China’s real estate market, the trend of real estate price and its influencing factors have been receiving more and more concerns and attention.The generation and continuous development of optimal currency area theory promote the academic community to pay attention and to study regional difference effects of monetary policy. The implementation of unified monetary policy on real estate price may have differences for different regions and different provinces in China. So studying in-depth regional differences of China’s real estate price and the differential regional effects of monetary policy on real estate price is particularly significant and practically meaningful.The essay takes China’s eight economic regions as the objective of the study. Firstly, it analyzes the regional differences of real estate prices in china’s eight economic regions influenced by monetary policy from1998to2010. The results have shown a rising trend of commodity housing average price in eight economic regions, however, the regional price level and fluctuation situation of commodity housing price are obviously different. Furthermore, the level of economic development, the demand for real estate, real estate supply and real estate financing conditions of the eight economic regions in China are studied from1998to2010, which suggests remarkable regional differences of the real estate market in China’s eight economic regions.Then the econometric models are used to empirically study the differential regional effects of China’s monetary policy on real estate price, and VAR model and impulse response function of eight economic regions and their representative areas-the internal cities of the northern coastal areas are established. Meanwhile, regional differences of the response of commodity housing price to monetary policy in eight economic regions and the internal cities of northern coastal areas are comparatively analyzed, respectively.The empirical analysis results show that money supply poses positive effects on China’s eight economic regions, as well as the internal cities of the northern coastal areas, and improving interest rates can make housing price decline in varying degrees in the short term. But in the long run, raising interest rates can not realize the goal of inhibition of housing prices rise for the regions and cities of higher commodity housing price. In the eight economic regions, the response of commodity housing price to money supply and interest rate shocks in the eastern, northern and southern coastal areas is more thorough and profound, while the response of commodity housing price to money supply in the middle reaches of the Yangtze River and Yellow River areas is the least obvious, and the response of commodity housing price to interest rate shocks in the Northeast, Southwest and northwest of China is also the least notable. Therefore, China should be adapted to local conditions, and implement targeted and differential monetary policy in the premise of adhering to the goal of unified monetary policy.