Linkage Analysis Among Real Estate Market, Stock Market And Inflation

Currency inflation is always the focus of the government, scholars and thecommon people as a vital expression of one country’s macro economy. Inflation, realestate and stock markets are all facing big challenges according to the economicsituation of our country. Hence, further studying on the relation of real estate prices,stock market prices and finding out the acting point for regulating and controlling aresignificant for monetary authorities to take appropriate fiscal and monetary policy.By sorting the study of the scholars both at home and abroad for the relationsbetween real estate market, the stock market and inflation, the author found that mostof them focused on congruent relationship of the three, little attention was paid to thesystem research and analysis of the whole. Based on economics theory of the three,this paper reviews the existing view and empirical analysis, using VAR model as thetool of empirical research on the three variables, then finds out the dynamicrelationship between them.This article is divided into two: theoretical part analyses the relationship amongthe real estate market, stock market and inflation; empirical part analyses the relationsamong the three sectors by correlation analysis, ADF tests, cointegration, grangercausality test, impulse response and variance decomposition. Conclusions are asfollowed: rising house prices will stimulate inflation, inflation will restrain the realestate prices to go up, share price and inflation interaction direction is uncertain; thedirection that the real estate prices affect the stock prices is uncertain either, shareprices will stimulate house prices to rise at last. On the basis of the analysis andinterpretation of results by contacting the theory and real economic significance, thispaper obtained the following enlightenment: investing in real estate should be guidedin a rational way, moderating the real estate market and stock market should bebalanced, stock market should be standardized through moderate control, social needsshould be regulated comprehensively so that it can be more rational.