Analyze The Effect Of The Stock Market And The Property Market On Money Demand

Along with the rapid development of China’s capital market, especially the continuously rapid development of stock market and the development and improvement of real estate market, micro economic subject is paying more and more attention to holding various forms of wealth, rather than limited to physical assets. Moreover, money demand function is not only related to the income, but to the transactional money demand. So in this economic situation, the impact of the stock market and real estate market on money demand cannot be ignored.This paper builds a virtual economy and real economy relationship model including stocks and real estate market, and uses this model to analyze the impact of the stocks and real estate market on money demand, then analyze the impact of the real economy, the stock market and real estate market on money demand through a brief regression. Then based on the cointegration and error correction model, respectively from the total money demand function and yield money demand function, this paper investigate the influence of both stocks and real estate market in on the narrow sense and broad money demand. The results show that, in the short term, whether total or yield model, in the money demand function model, the impact of the stock market on narrow money demand and broad money demand is positive, the influence of the real estate market on narrow money demand and broad money demand are negative. In the long term, in the total money demand function model, the impact of the circulation of stock market on the narrow money demand and broad money demand positive, the impact of real estate sales on the narrow money demand is negative, and the impact of real estate sales on the broad money demand is positive; In the yield money demand function model, the stock price is positively related to the narrow money demand and broad money demand, real estate price is negatively related to the narrow money demand and broad money demand is a negative correlation.At present, most of the study of the stock market and real estate market on money demand are using in the form of income-producing money demand function. Few studies uses the form of transactional currency demand function. And more studies used the data before the financial crisis in previous years. So using the data after the financial crisis, and comprised analyzing the two currency demand functions together is one of the main innovation points. At the mean time, this paper provides a new perspective for future research. In the end, combining with theoretical analysis and empirical analysis, the paper suggested that the monetary authorities should consider the impact of the real estate market and financial market on money demand when setting monetary policy, ignoring them may cause deflation and the influence of the generation of asset bubbles.