The Correlation between Monetary Policy and Housing Price Change Based on a VAR Model

Abstract

In early 2020, the global economy was severely hit by the COVID-19 pandemic. Governments, including China, have adopted expansionary fiscal policies to stimulate demand and quantitative easing to increase the money supply to boost the economy by lowering lending rates. This paper starts from the influence of monetary policy on housing price mechanism, tries to explore the monetary policy on interest rate and money supply, finally establishes the VAR model, empirically analyzes the effectiveness of the impact of monetary policy on housing price changes, and makes a policy suggestion to demonstrate the necessity of consideration when stimulating the economy, to avoid housing price rise too fast, which affects the people's livelihood, and to have a negative impact on social sustainable development.