The impact of monetary policy on China’s house prices

Mao, Xinlu 2024. The impact of monetary policy on China’s house prices. PhD Thesis, Cardiff University. Item availability restricted.

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Abstract

This paper constructs two Dynamic Stochastic General Equilibrium (DSGE) models: a New Keynesian model and a model that incorporates Chinese characteristic monetary policy. The latter includes multiple tools, adjustments to the benchmark interest rates, changes to the reserve requirement ratios, and the imposition of lending rate floors and deposit ceilings by the central bank. The fitness of these models is evaluated and estimated using the indirect inference method. This analysis examines transmission mechanisms, effectiveness, and impact of monetary policies on the housing market. Additionally, the primary causes of housing dynamics are explored. The results indicate that the model with specific Chinese monetary policies fits the data better. Both models reveal that housing demand shocks dominate housing price dynamics. A comparative analysis shows the inclusion of specific monetary policies provides more effective regulation of house prices. Welfare analysis reveals that the system of restriction on interest rates leads to economic instability. Maintaining control over housing prices comes at the expense of economic stability.

Item Type:	Thesis (PhD)
Date Type:	Completion
Status:	Unpublished
Schools:	Schools > Business (Including Economics)
Date of First Compliant Deposit:	19 May 2025
Last Modified:	19 May 2025 13:55
URI:	https://orca.cardiff.ac.uk/id/eprint/178335

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