| I he international economy has a dramatically change in the later of 20 century, and the conceptof the Globalization has popular in the world. What the most of change in the Globalization is the development of Capital Markets. Domestical Capital Markets opening for foreign investors has united into an International Capital Market under the technology and the financial innovations. Every country has to face this changing international environment and relocate his own position and domestic macroeconomics policies.The International Capital Market Value amounting to 60000 billion dollars has more than that of the real economy, and the speed of the financial assets growth has also fasted two or three times than GNP. In the framework of the world, the GNP of U.S has only 25 percent in the world, however, the dollar has share 90 percent in the foreign currency transaction and the Stock Market value has more then 50 percent in the whole world. The facts only mean that the position of U.S in the international financial market has much higher than the real economy.From the Michigan SRC Survey of Consumers, the financial assets holding by U.S houses has increased 18 percent from 31.9% in 1989 to 49.2% in 1998. That is, almost half of the U.S houses have a variety of financial assets. The empirical evidence suggests that the assets structure would effect the investing behavioral, saving behavioral and spending behavioral in the short-term and long-term period.So, Greespan stressed that the new challenge of the U.S Monetary Policy in new time has mainly came from Stock Market, for the ratio of private investment in U.S house wealth is greater than ever and the Federal Reserve has to pay more attention on the movement of Stock Market.But among the economists, there have lots of disagree on the issue. Some thought monetary policy should respond to stock market for the financial assets price volatility; the other presented the monetary policy ought to target the inflation targeting, especially on the wage and the primary goods price, for the more important of real economy.This dissertation will shed new light on the issue of the relationship between the stock market and the monetary policy. In the paper, I intend to investigate the co-evolution between the financial and the real sectors with normative methodology, the effect of changing of Stock market on the monetary economics by empirical analysis and the modification of the monetary policy for the new challenge. In order to solve this problem stipulation the relative problem thatis "why should the monetary policy react to the change of capital market directly? "This thesis consists of four main parts:The first part introduces extensively the history evolution of the monetary theory and policy during this century, especially on newly research in these years. This part focus on the non-monetary assets research, for it is the newly shock to the monetary policy.The second part as the basis of the whole paper discusses intensively the relationship between the Capital Market and the real sectors. In the part, I present a new point about the relationship, that is consistency. The base of the consistency is asset, and on the consistency I develop a new model to analysis the macroeconomics from a new aspectTo prove the consistency of the capital market and real sectors, I use the theoretical and empirical methodology in this part In the theoretical analysis, I present the assets as the base of consistency economy, explain the consistency economy contents and emphasis the framework of consistency analysis. Following the theoretical analysis, I stress the empirical of the effect the capital market on the real sector. The empirical study divides into two parts: growth consistency and stability consistency.The third part attempts to emphasize the direct effects of Capital Market on the monetary economics. The effects include money demand, money velocity, and monetary transmission. The result is that the more development of capital market, the more imp...
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