An Empirical Research On The Effect Of Currency Over-issuing And Cross-border Capital Flow To House Prices Fluctuations

Chinese real estate market has entered an upward cycle since 2003,the real estate market dynamic which matters national economy and livelihood has become the focus of government and common people,of which,the house prices fluctuations is the main focus.While the existing literatures about the factors of house prices fluctuations have been very comprehensive and mature,but there are two factors which do not get much attention enter into my eyes.According to the recent data can be found that the scale of the currency over-issuing has increased and the cross-border capital flows has racked up since China joining the WTO,but the cross-border capital flows out flowed in recent two years.The inflow of this two parts exacerbate the fluctuation degree of house prices,and the excessive fluctuations of house prices will affect the financial stability and the development of Chinese economy undoubtedly.Therefore,the study on the effect of currency over-issuing and cross-border capital flow to house prices fluctuations has practical significance and research value.In this context,this paper selects five variables of Chinese economy in 2000-2016,and the variables include the scale of currency over-issuing,the volume of cross-border capital flow,the growth rate of house prices,the actual interest rate on loan and the inflation rate.Then,use the MS-VAR model to analysis the effect of currency over-issuing and cross-border capital flow to house prices fluctuations in different situations.The results showed that the currency over-issuing and the cross-border capital flow both have positive effect on the growth rate of house prices,but the effect is significant only under the housing slump.The impulse function test shows that the currency over-issuing and the cross-border capital flow both have a positive impact on the growth rate of house prices.At the same time,through quantify the Chinese house prices control policy and building the empirical model to test whether these regulatory policies are effective.The result shows that the policies which through adjust tax,down payment,exchange rate to control the house prices are not effective,and the impact of monetary policy on price fluctuations is more significant.Finally,based on the empirical results,the paper gives some advice:(1)Implement monetary policy flexibly and improve the money use efficiency;(2)Strengthen the monitoring of cross-border capital flow and regulate its flow fields;(3)Accelerate market-oriented interest rate reform and active currency management expansion;(4)develop government functions and regulate the real estate market.