An empirical study on the relationship of regional real estate investment and the amount of money supply in China

Cointegration test of multivariate time series by Johansen (1995) multivariable system maximum likelihood method showed that there is a long-term stable and balanced relation between the amount of money supply and regional real estate investment. It can be seen from the Granger causality test that the M1 is the reason of the real estate investment. But the impact of monetary policy on real estate investment is variable in different regions. The real estate overheating exists mainly in developed but not in the less developed regions because of the shortage of invest funds. Real estate investment lies much on the local credit scales. It is necessary to consider about the imbalance among different regions to constitute a regional real estate credit policy under a uniform money policy.