Inflation Expected Environmental Effect Of China's Monetary Policy Asymmetry Effect

Inflation is one of the core questions in macro-economy, it is related to the development of the socialist market economy and stableness of politics. Especially since the inflation of2007, inflation becomes the most caring topic in the daily life of people. What’s more, the scholars have never stopped their research of inflation. Most recent researches in inflation theories have emphasized on the role of the expectation, in practice,"manage inflation expectation effectively" has become the regulation policy of the Central Economic Working Conference in recent years. As an important means to control inflation, Monetary policy attached great importance by almost economics and countries, so the effect of monetary policy has been the greatest concern of the monetary authorities. This article analyzed the effect of different monetary policy tools to fight inflation based on the expected inflation rate, to find whether the expectation has influence to inflation.In this paper, expected inflation rate is the important variable, so having the ability to measure it accurately is the premise of our study. On the basis of theoretical analysis, we compared several measurement methods from abroad. We found Securities nominal income interest margin method was easy and convenient, but due to the restrictions in our economic system and capital market, low market degree of interest rate, poor fluidity of bounds, and due to Unissued inflation index bonds, so this method is not suitable for our country. In addition, based on China’s economic data, the paper applied the questionnaire survey method and measurement model method to measure the expected rate. The results showed that the method of measurement prediction effect is more suitable to the actual inflation.In order to inspect asymmetry of China’s monetary policy, in this paper, tested whether linear regression model of inflation had nonlinear characteristics.Then, with money supply and interest rates on behalf of monetary policy tools established LSTR models respectively, and the conversion variable was expected inflation. The empirical results showed that our monetary policy tools do exist asymmetric effect in different expected, and quantified this asymmetric effect to determine the reasonable interval of the money supply and interest rates.Finally, according to the theoretical models and empirical analysis conclusion, this paper put forward some suggestions to enhance flexibility and foresight of our monetary policy.