Research on the Effect of Real Estate Price to Intermediate Objectives of Monetary Policy Based on ECM

This paper reviews some relevant literatures first, then takes a co-integration test on broad money supply, real estate price index and interbank interest rate, and establishes the error correction model. The conclusions are as follows, it is a negative relationship between interbank interest rate volatility and M2, the coefficient of elasticity is -0.0522; short-term fluctuation of real estate price index and volatility of M2 shows a positive relationship and its elasticity is 0.0327, which shows that the real estate as collateral for a loan, increase of their prices will increase the money supply, thereby enhancing endogenous money supply, which in turn reduces the controllability of the money supply as an intermediate objective; The coefficient of error correction term is 0.0033, indicating a long-term fluctuations in the real estate price index also plays a positive role on the volatility of broad money supply. When the short-term fluctuations deviate from the long-run equilibrium, adjustment of at the level of 0.0033 will be intensified, which makes it go back to the to the long run equilibrium.