The Study On Asymmetric Effects Of Monetary Policy On Inflation Expectations

Inflation expectation is an important factor that affects the actual inflation, so the government needs to establish reasonable and effective monetary policy to prevent inflation expectation excessive fluctuations and maintain stable economic development. However, in different states of economy, what impact the central bank’s similar monetary policy will do on the formation of inflation expectation; and what kind of Monetary Quantity Rule the central bank needs to adopt to meet the needs of financial stability and economic growth, without increasing public expectations for inflation, settling above matters has important practical significance for Chinese present economic development.Based on discussing upward issues and existing articles, we will have theoretical and empirical analysis about the impact of monetary policy changes to inflation expectations.Firstly, there are overview theories of asymmetric effects of monetary policy and inflation expectations, and then the article analyzes changes in monetary policy to influence inflation expectations mechanism theoretically.Secondly, it has statistical descriptions about the state of proxy variables of monetary policy, calculation of inflation expectation, correlation analysis of money supply and inflation expectation.Furthermore, we use MS-VAR Model and relevant data to do empirical test and analysis, the empirical results are as follow: the effects of changes in monetary policy on inflation expectations are significantly different in different regimes. In the state of high inflation, money supply changes have greater impact on inflation expectation; conversely, in the state of low inflation, money supply changes have little effect on inflation expectation.Finally, several policy proposals about inflation expectations management for central bank are put forward, by summarizing the results of the previous theory and empirical results: constructing reasonable money supply growth rules, enhancing the transparency of monetary policy and communication, stabilizing real estate prices.