| The world capital markets is blustery since the1980s, the stability of a nation’sfinancial system is even influenced by the violent fluctuation of the asset prices.The effect of asset prices on inflation, the long-term relationship between thetwo parts, the time for the monetary policy to cut into, the selection of monetarypolicy tools and the implementation effect are all concerned throughout theworld. Since2000, asset prices represented by stock prices, house prices hadfluctuated substantially in our country. For this reason, based on the basictheory, the paper selects the quarterly data between the first quarter of2000tothe second quarter of2011, use the relevant analysis, vector regression modeland the mean model to analyze the relationships among asset prices, inflationand the monetary policy. The empirical results show that Chinese stock priceshave significant effect on inflation, but the long-term relationship between thetwo is not stable. The response of stock prices on interest rates is moresensitive, and stock price shows obvious response to monetary policy. Thestock price should not be taken into monetary policy goals by the central bank,but should be given attention. If the stock prices rise over a certain critical point,the central bank should select different monetary policy tools, to stable theprices and indirectly control the stock prices. The rise of China’s real estateprices boost inflation by expanding the total demand, house prices andinflation have long-term and stable relationship, house prices responsesrelatively weak to monetary policy, quantitative monetary policy tools are moreimportant compared with price type monetary policy tools. House prices shouldnot be included into the monetary policy goal, but the central bank should"focus" on housing prices, when the house prices rise above a certain scope,different monetary policy tools should be used to indirectly inhibit housingprices, in case the rising house prices induced into inflation. |
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