An Analysis of Down Payment Constraint on Chinese Real Estate Price Fluctuations: Based on DSGE Models

摘要

Based on the down payment constraint of housing loans in selective tools of monetary policy, we build Dynamic Stochastic General Equilibrium (DSGE) models which contain real estate consumption. This paper studies the response of the real estate price to down payment constraint using dynamic optimization method. Our results suggest that the policy of down payment constraint increases the cost of the down payment for families when they purchase houses, leading to the reduction of real estate consumption; higher down payments constraint causes the economic negative growth. Therefore the central bank should regard the economic growth as a primary objective in the process of the implementation of monetary policy without having to make an adjustment according to the operation condition of the real estate market.