A Comparetive Analysis Of The Real Estate Regulation Effect Of Monetary Policies And Finacial Policies

In1998, China implemented the housing system reform with housing distributionmonetization and housing guarantee system as its main content. The reform has promotedthe rapid development of the real estate market, making the real estate industry graduallybecome Chinese pillar industry. The healthy development of the real estate industry is notonly an important force fueling the economic development, but also provides the majorbasis to meet people’s demand of comfortable housing. To ensure the healthydevelopment of the real estate industry, on one hand the market mechanism should beimproved; on the other hand vigorous government financial policies and monetary policiesshould be adopted for regulating the real estate market. To government, which one is moreeffective in regulating the real estate market, monetary polies or financial policies? It isobvious that research into the issue can provide important theoretical references and is ofvital practical meaning.This article conducts a comparative study of the monetary policies and financialpolicies in the real estate market from three aspects. First, this paper analyzes thetransmission mechanisms of monetary polies and financial policies about housing pricesrespectively and compares their transmission mechanism. Following that, this paperreviews the practices of Chinese monetary policies and financial policies in the real estatemarket and compares the practice effects of monetary policies and financial policies. Thenbased on the transmission mechanisms of monetary polies and financial policies abouthousing prices and the practical situations of Chinese real estate market, this paperchooses monetary supply quantity and interest rate as the proxy variables of the monetarypolicies, real estate tax and public financial spending as the proxy variables of thefinancial policies and Chinese real estate price, real estate building cost and real estatestock as the representative variables. Through establishing VAR model of Chinese realestate price, real estate building cost, real estate stock, Chinese real estate price, personaldisposable income and proxy variables of monetary policies and financial policies, thispaper analyzes the Granger cause and effect relationship between the variables, modelstability and impulse response function. In terms of real estate price regulation effect fromlarge to small, the order is monetary supply quantity, public financial spending, interestrate and real estate tax. In terms of lag phase from shorter ones to longer ones, the order ismonetary supply quantity, interest rate, public financial spending and real estate tax. Currently, monetary supply quantity is the most effective regulation tool in China, and realestate tax is less effective.The innovation of this paper lies in two aspects. One is the theoretical part of thispaper, which employs demand elasticity and supply elasticity to decide the four tools havea bigger influence on demand elasticity or supply elasticity, succeeding in gaining theregulation direction of interest rate, monetary supply quantity, financial spending and realestate tax about housing prices. The other is including the two monetary policies ofinterest rate, monetary supply quantity, public financial spending and real estate tax into amodel analysis framework, analyzing the effectiveness of monetary policies and financialpolicies in regulating housing price. Based on the empirical results, this paper analyzeswhich is more effective in regulating housing price, monetary policies or financialpolicies.