Empirical analysis on impact of dual regulation on supply and demand of China's real estate

The remarkable feature of the regulation way of China's Monetary Policy at present is the direct control of interest rate and indirect regulation of money supply, which is so-called "Dual Regulation". This paper chooses the monthly data since housing system reform in 1998n and makes an empirical analysis on the impact of money supply and interest rate under dual regulation on supply and demand of Chinese real estate. And the conclusion can be concluded as follows: (1) There is co-integration relationship between money supply and real estate supply. Money supply is Granger cause of real estate supply. There are approaches that money supply influences real estate supply through credit. (2) Money supply and real estate demand is highly correlated while no co-integration relationship between them. Money supply is not Granger cause of real estate demand, which shows that transmission channel from money supply to the real estate demand is obstructed. (3) There is no significant relationship between interest rate and real estate supply and the effect of interest rate policy on real estate supply is insignificant and limited.(4) Interest rate and real estate demand is highly correlated, and interest rate change is the reason of the change of real estate demand. There is a long-term equilibrium relationship between them, which further demonstrates that our government can regulate the real estate demand through interest rate policy.