| The asymmetric effect of monetary policy means that the effect of expansionary monetary policy and the effect of contractionary monetary policy are asymmetric. Now, this issue has drawn increasingly more attention by economists. Under the current economic situation, it's getting more and more difficult to operate China's monetary policy. Therefore, studying the asymmetric effect of China's monetary policy seems to be much more significant right now, which can help us understand the effect of monetary policy and help operate the monetary policy.In the main part, we first reviewed China's monetary policy operated during 1984 to 2009. Then we use China's quarterly date from 1998 to 2009, selecting three levels of money supply, M0, M1, M2 on behalf of the monetary policy's variable, selecting GDP as an output variable, CPI as the price variable. Besides, we also the take the real estate price index (HP) and the stock market price index (SP) into account, using VAR model during the empirical analysis, in order to explore the asymmetry effect of China's monetary policy. The results of the empirical study show the existence of asymmetric effect of China's monetary policy. The effect of tight monetary policy on GDP and CPI is greater than the impact of expansionary monetary policy, while the effect of expansionary monetary policy on the HP is greater than the impact of the tight monetary policy. Finally, the paper concludes the reasons for the asymmetric effect of monetary policy based on the existing theories and the latest economic situation in China.In the end, we draw the conclusions and raise several policy recommendations. |
