The Asymmetric Analysis Of Chinese Money Molicy,Inflation And Economical Fluctuation

Inflation is one of most important macroeconomic variables, it is vital not only to the people's lives, but also is related to the development of the socialist market economy. Especially since the inflation of 2007, inflation seems to be back and becomes the most caring topic in the daily lives of people, people are getting more and more emphasis on price issues. The Government's concern on prices has never stopped, as China continues to promote the process of marketization, the regulation of the monetary policy to the economy, especially to some key economic indicators such as inflation is getting more and more important. Recalling the work of the government report, we will find that over the years, government is getting more and more emphasis on the economical regulation of monetary policy. Especially in recent time, our country and most of countries in the world use active monetary policy to stimulate the economy, it will threaten the price in the future.This article uses the New Keynesian theory as the theoretical basis, and uses the Mankiw and Reis (2002) extended sticky information model of sticky price of the original Phillips curve as the empirical basis, we add the monetary policy variable to the process of the empirical analysis, so that we can demonstrated if China's monetary policy has effects on inflation and how it works.The first part of this paper is an introduction which describes the background and significance of writing this article. The second part is the theoretical part of this paper and is mainly discussed the theoretical basis of this article. The third part is the empirical part of this paper and is also one of innovations of this paper, we use the rolling VAR method to build a dynamic forecasting model, so that we could estimate the information out of the sample, we get the expectation of inflationπe in the context of sticky information model. The fourth part bases on the expectation of inflation getting from the third part, we use the LSTAR model and add the monetary variable into the model, we use this model to estimate that in the different stages of the inflation expectations, if the monetary policy has asymmetric effect on inflation. We get the conclusion in the fifth part of this paper. On the basis of analysis in this paper, we get the conclusion that when inflation expectation exceeds a certain threshold, the effect of it would decrease. In addition, by comparing the effect of interest rate and M1 to price, we found that when the inflation expectation is less than 2.8%, M1 could regulate prices significantly; when the inflation expectation is at 2.8%～3.9%, the two monetary policy tools both have significant effect on the regulation of prices; and when the inflation expectation is higher than the 3.9%, the effect of interest rate is significant.