Interactions of Economic Development, Government Intervention and Real Estate Price Based on the Analysis of the Impulse-response Function

Abstract

Using the PVAR model, impulse-response function and variance decomposition, this paper analyzes the interaction between Chinese economic development level, government intervention degree and real estate price, based on the inter-provincial panel data from 2000 to 2013 of China. The results show that the economic development level and the marketization degree have a positive impact on housing price, and in the long run, the self-regulation of marketization is the main factor that affecting the housing price; the government intervention can effectively curb the promotion of real estate price, but if the enthusiasm of the government to implement the intervention is not high, the excessive price of the real estate will hinder the Chinese economic development. The Chinese government should accurately grasp the relationship between real estate price and macroeconomic factors, playing a role in the market to promote the healthy and orderly development of the real estate market.