House Price Fluctuation,Macro-prudential Policy And Monetary Policy Coordination

After the subprime crisis broke out in 2007,countries around the world began to notice that financial risks were neglected in monetary policy.Since then,macroprudential policy,which is the "patch" of monetary policy,has received unprecedented attention.In recent years,the development of China’s financial institutions has led to a huge influx of credit funds into the real estate market,housing prices have risen sharply,the original financial supervision system has been challenged.In order to improve the corresponding risk resistance,in 2017,our country formally proposed the "monetary policy + macroprudential" two-pillar regulatory framework,which pointed out that we should strengthen the macro-prudential management of the housing market,effectively compensate for the lack of attention to the great systemic risks of the financial cycle in the past,the single monetary policy has been formally changed to a complementary two-pillar policy.The two policies have their own focus,and there may be conflicts in their implementation.In the past,scholars have done a lot of research on how to regulate the real estate market with monetary policy.Therefore,it is of great research value to study the coordination of monetary policy and macroprudential policy in order to stabilize the fluctuation of house prices and ensure the healthy development of our real estate market and even the macroeconomics.In this paper,by constructing a multi-sector dynamic stochastic general equilibrium(DSGE)model,the loan value ratio(LTV),an important tool of macroprudential policy,is added to the model,and loan value ratio policies are designed to target different variables.At the same time,combining two Taylor rules,we observed the effects of different macroprudential policies and monetary policy combinations under housing preference shock,technology shock,credit shock,government expenditure shock,interest rate shock and housing supply shock,and chose the macroprudential policies feasible under different Taylor rules to make the judgment of the optimal policy combination.In this paper,the simulation analysis is carried out from three aspects:social welfare loss,pulse corresponding graph and variance decomposition.The results show that:(1)Compared with the effects of monetary policy alone,the coordinated use of macroprudential policies can improve the resilience of the economy to various exogenous shocks,and can better achieve the goals of stabilizing house prices,reducing economic volatility and substantially reducing social welfare losses.(2)Extended Taylor rule monetary policy paired with loan-to-value ratio can stabilize house prices more effectively,but it can also bring other key economic variables such as price level and output level fluctuation,so the final policy should be a combination of policies with the least social welfare losses in the specific circumstances.(3)From the perspective of specific coordination methods,under the impact of housing preference and the impact of real estate supply,the combination of the loan to value ratio that only focuses on price fluctuations and the expanded Taylor rule monetary policy has the best effect in regulating the real estate market;Under the impact of interest rate and technology,the combination of the loan to value ratio that focuses on the fluctuation of house price and the deviation of the steady deviation of real estate credit and the traditional Taylor rule monetary policy has the best effect on regulating the real estate market;Under the impact of credit,the combination of the loan to value ratio that only focuses on price fluctuations and the expanded Taylor rule monetary policy has the best effect on regulating the real estate market;Under the impact of government expenditure,the combination of the loan to value ratio that only focuses on the steady deviation of housing real estate credit and the expanded Taylor rule monetary policy has the best effect on regulating the real estate market.Based on the above research,the policy recommendations of this paper have three points:(1)When formulating policies,the relevant policy departments need to combine practice with concrete analysis of specific situations and coordinate their use while grasping the strength of implementation.(2)Actively take measures to reduce leverage and improve the regulatory framework of relevant financial institutions.(3)Optimize the information communication mechanism of the relevant policy departments to achieve precise coordination in the implementation of the two policies.