The Stock Market Bubble and Monetary Policy
|School||Anhui University of|
|Keywords||The stock market bubble monetary policy Granger causality test Impulse response analysis Variance decomposition|
As a hot topic in the stock market, the stock market bubble has been the theoretical circle and practitioners focus. Historical experience tells us that over-inflated stock market bubble will bring disastrous consequences to financial security and economic systems. But so far, our government’s monetary policy aimed at inflation control, did not control the stock market bubble in targeted. So there are lots of questions about the effect of the monetary policy while in the progress of regulation and control,the study about the stock market bubble and monetary policy issues is undoubtedly to have very important practical significance. First ,the article makes a conclusion of the previous studies, defines the definition of the stock market bubble. Then measures the stock market bubble in China by the co-integration equation and takes the corresponding statistical analysis. After that,the article get the theoretical relationship about the stock market bubble and monetary policy,while in china,for the history of the stock market is not very long,the clear conclusions can’t draw by observation,so the econometric research should be used to test the relationship between the stock market bubble and monetary policy.Measurement results show that: China stock market bubble has a relatively long period while in the reduced state,In the increasing stage, the stock market bubble is closer to a larger positive , in the decreasing phase, tends to a smaller negative, and the stock market bubble has a certain degree of positive feedback nature, which explains the existence of Herding in China’s stock market; Further econometric research on China’s stock market bubble and monetary policy, we can see: monetary policy is not adjusted for the stock market bubble, but the change in the stock market bubble is a good signal to adjust monetary policy.which indicates that our implementation of the relevant central bank monetary policy are genuinely concerned about changes in the stock market bubble, which is in support of the central bank’acting when conduct monetary policy position. Because it’s difficult to operate monetary policy when varys directly to the stock bubble .it can get the monetary authority’s attention when inflation is only affected by the stock market bubble. The test supports that China’s monetary policy is target to keep the long-term stability of the inflation rate.