China 's Housing Prices And Monetary Policy

The house price has been the most important issue in both macroeconomics and people’s welfare in China. My paper wants to solve the problem that whether there exists effective monetary policy in controlling the house price. The paper establishes the model of commercial market and monetary market by including the factor of house price and uses the stable condition of hyperbolic partial differential equation and the rule of implicit function. The paper confirms the relation between house price and monetary policy. I use the Markov-Switching VAR to do the empirical research and found (1) There exists obvious stage transition in the house price,one is the high increase stage and the other is the reserved increase stage. The stage transition is closely linked to the policy.(2)The price tool is more effective than the number tool in the high increase stage and vice versa.(3)The correlation between money supply and house price is weak, while the effective money supply that is loan supply accounts (4) In the short time, the interest factor affects house price most in the hot market.(5) Inflation has similar effects on both stages in the long run. Therefore, various monetary policies should be applied in various stages.