“Regional Heterogeneity and the Trans-Regional Interaction of Housing Prices and Inflation: Evidence From China`s 35 Major Cities” Urban Studies, 53(16), 3472-3492.
The changes in money supply may exert positive influence on housing price and inflation. However, the existing macro studies did not explain the possible regional heterogeneity influence of money supply on housing price. The studies based on macro data may cause biased errors if there is a great discrepancy among the housing prices in different regions.What influences the housing price change in some particular cities may exert on housing prices of the cities per se and the other cities? What influences the housing price in these cities may exert on the inflation of the cities per se and the other cities? These two issues were seldom studied.
This paper constructs an analysis framework that connects theregional heterogeneity of monetary policy impact, the Spillover Effect of housing price and the trans-regional interaction of housing price and inflation. Most of the existing literature ignores these connections. The traditional monetary policies often overlooked their influence on the regional heterogeneity of housing price and inflation, which may weaken the effectiveness of these policies. The impact of the regulation polices on housing price and inflation may also be reduced if there is interrelation between the housing prices of different cities, and between housing price and inflation.
In conclusion, the empiricalresult of this paper is significant to policy making. Easing monetary policy is not the best choice for the control of housing price.Restraining the housing prices of key cities through the interrelation between housing price and inflation may exert inhibitory effects on the housing price and inflation all over the country.