The Influence About Monetary Policy To Business Cycle And Policy Option In Chinese

Monetary policy is an important component of macroeconomic policy of a country, which plays an increasingly important role in the development of the national economy. Every nation in the world enforces macroeconomic regulation and control on the domestic economy through monetary policy implementation. The relations between monetary policy and the economic cycle is the subject of debate in macroeconomics in a long time. The international financial crisis occurred in 2008 put the debate to a climax on how monetary policy affects economic cycle. How to formulate and implement monetary policy better and help the economy develop in a healthy and stable status, is the focus of a national monetary authorities after the financial crisis.In this paper, the author introduced relative theory of monetary policy and economic cycle after the literature review and analysis about the impact of monetary policy to the business cycle. Then we carried out quantitative analysis of the impact of monetary policy to economic cycle. We concluded that monetary lash affect the real economy obviously, the change of monetary supply is the significant reason of the surge of economic cycle. Next, we interpret the mechanism of monetary policy to business cycle fluctuation, reviewed the monetary policy since the financial crisis of 2008 of China. Then we come to the conclusion that artificial prosperity is not sustainable. Finally, the author puts forward some policy recommendations.The main point of the paper are as follows:Firstly, under comprehensive analysis of relevant documents, we come to the conclusion that monetary policy is asymmetric in economic cycle based on the different stages; Secondly, Chinese monetary policy affect the economic cycle obviously, the change of money supply volume is the significant reason of the fluctuation of business cycle. Thirdly, to review the practice of monetary policy after the financial crisis of 2008 in China, we come to the conclusion that a man-made economic prosperity is not sustainable; In the end, we should change the thinking of operation about monetary policy, no longer keep a close eye to CPI and turn to money supply and interest rates as monitoring indicators.