Open AccessInternational Real Estate Review
Author(s) -
Zan Yang,
Shuping Wu,
Yulong Shen
Publication year - 2017
Publication title -
journal of the asian real estate society
Language(s) - English
Resource type - Journals
ISSN - 1029-6131
DOI - 10.53383/100234
Subject(s) - counterfactual thinking , economics , monetary policy , consumption (sociology) , vector autoregression , real estate , structural vector autoregression , monetary economics , credit channel , macroeconomics , inflation targeting , finance , social science , philosophy , epistemology , sociology
This paper studies the relationships among monetary policy, house prices, and consumption in China from both national and regional perspectives. Using a panel vector autoregression (VAR) model and a counterfactual simulation method, we find that monetary policy has a significant effect on consumption but with a regional pattern, in terms of the magnitude and the housing wealth channel. It is found that in the middle southern and the western cities, the monetary policy has strong effects on consumption while the house prices have minimal contribution to the monetary policy transmission to household consumption. By contrast, in the Tier-1 and the eastern cities, house prices play a more important role in monetary policy transmission; even household consumption is less sensitive to monetary policy changes.