Asset Revaluation And The Choice Of Monetary Policy

Since the beginning of the 21 st century,China's accession to the WTO has marked the opening up of the country,which has further strengthened the characteristics of the “double surplus” of the current account and capital account since the implementation of the foreign exchange management system in 1994.The proportion of foreign exchange assets in the assets of the central bank has been increasing year by year,and the liquidity delivery mode of hedging foreign exchange has officially begun in China.After nearly 20 years,under the condition of stable inflation,a large number of currencies put into the economy flowed into the capital market,which led to the systematic rise of the stock market valuation center and the sharp rise in the real estate market price.The issue of asset revaluation is highlighted.With China's economic development entering the "new normal" in 2013,the reduction of foreign trade surplus makes it difficult for China to sustain the money supply based on foreign assets.Liquidity is gradually shifting to domestic assets as the credit-based delivery.At this time,the healthy development of the capital market is even more needed.Especially in the report of the 19 th National Congress of the CPC in 2017,it is clearly pointed out that China's economy has moved forward from the stage of high-speed growth to the stage of high-quality development,and the transformation of development mode,economic structure and development momentum has become the primary mission of the next stage.Therefore,asset revaluation and economic restructuring have become important issues in China's economic development.Based on the current situation of China's economic development,this paper defines the exact definition of asset revaluation from the perspective of phenomena to essence,theory to empirical research.Firstly,it defines the accurate definition of asset revaluation through concept comparison.On the basis of analyzing the capital market fluctuation cases of relevant countries,innovatively put forward the analytical perspective of asset revaluation,and establish an asset revaluation detection system to interpret the asset revaluation level of the capital market operation represented by Chinese real estate market.After defining the connotation of asset revaluation based on theoretical and factual tests,this paper tries to find out the influencing factors of asset revaluation on the monetary quantity and structure level from the macroeconomic background of our country,and explores the essence of asset revaluation.Then it discusses the interaction mechanism between asset revaluation and monetary policy,and the structural constraints of the economic system faced by monetary policy in dealing with asset revaluation.Finally,the implementation framework of monetary policy under the background of asset revaluation and distortion of economic structure,and through the empirical test of the implementation effect of innovative structural monetary policy tools,realizes the research route from theory to practice,and proposes policy recommendations for flexible use of innovative structural monetary policy tools to deal with asset revaluation and the problems of economic structure.According to this logical clue,the core content of this paper is summarized into four aspects:This paper first defines the concept of asset revaluation.Based on a comprehensive analysis of the concepts and characteristics of asset,asset pricing,asset price volatility and asset bubbles,combined with existing literature research,the definition of asset revaluation is given: Asset revaluation refers to the process of capital goods prices rising in an all-round way caused by various shocks in the economic system which affect the profitability expectations of investors and change the amount and structure of capital allocation in the capital market.It is mainly manifested in the decline of risk-free interest rate and the systematic rise of valuation center in the capital market.At the same time,the connotation and characteristics of asset revaluation are sorted out,and the hidden troubles of financial stability caused by the performance and process of asset revaluation through economic operation are summarized.Then it analyzes the characteristics and causes of the different performances of the capital market in the 1990 s when the development paths of Japan and Germany are consistent in the late World War ?,and innovatively explains the operation of the capital market in the representative period from the perspective of asset revaluation.It is concluded that in the 15 years before the burst of asset bubbles,the real estate market and stock market in Japan had experienced the process of asset revaluation.The real estate market in Germany after the 2008 financial crisis also experienced the process of asset revaluation.In order to further explore the connotation of asset revaluation through data,based on China's concrete national conditions,this paper chooses the real estate market in the capital market,which can better reflect the process of asset price revaluation,and establishes the testing system of asset price revaluation.It synthetically selects 12 indicators of supply,demand and credit.The supply index,demand index,credit index and composite index are compiled,and each index value is divided into three testing intervals: stationary,revaluation and early warning.The state of each index is determined according to the index trend chart.Finally,using the testing index system,this paper makes an empirical analysis of the performance of the five stages of the development of Chinese real estate market.Combining with the different policy characteristics of the relevant periods,it verifies the correctness of the testing index and concludes that Chinese real estate market has experienced and will continue to undergo the process of asset revaluation since 2003,and the warning of bubbles has appeared in individual years.Based on the concept definition and connotation of asset revaluation,this paper then introduces and studies the macroeconomic background and causes of asset revaluation.China's macroeconomic development at this stage presents the following characteristics: Economic development model driven by a large number of investment,monetary inflation and economic disintegration to the virtual,the widening income gap between residents and high savings rate led to asset prices inflation.On this basis,the influencing factors of asset revaluation are further analyzed: Through the analysis of price revaluation of the real estate market,the excess liquidity of the reasons for asset revaluation is obtained;Through the analysis of the theory of monetary function and the "mystery of high currency",we can get the change in monetary structure of the reasons for asset revaluation;By studying the asset substitution and factor price revaluation,the asset factor of the reasons for asset revaluation is obtained.This part is the process of analyzing asset revaluation from the phenomenon to the essence.On the basis of clarifying the influencing factors behind asset revaluation,this paper begins to study the main reasons,namely,the quantity and structure of money.The paper first discusses the interactive influence mechanism between asset revaluation and monetary policy.In the beginning,it introduces four transmission channels of monetary policy,emphasizing the role of asset price channels in monetary policy transmission,and specifically analyzes the transmission mechanism of real estate price to monetary policy according to the actual situation in China.Next,we study the interaction mechanism between asset revaluation and monetary policy.Through the classic analysis framework of Bordo-Jeanne,we explore the dilemma faced by monetary authorities during asset price inflation: The choice of proactive monetary policy and passive monetary policy.The conclusion is that there is a potential credit crisis in the rise of collateral prices caused by asset revaluation,and the monetary authority should decide whether to take necessary measures to limit the scale of credit according to specific economic conditions(such as expect).Then in the study of the structural constraints of asset revaluation and monetary policy,the paper first discusses the relationship between asset revaluation and incomplete financial market and structural distortions of real economy.Then,according to the structural distortions existing in the real economy of China,this paper constructs a dynamic model of partial equilibrium of credit market,clarifies the intrinsic interaction mechanism between the systematic rise of interest rate and the distortions of economic structure(such as the expansion of government financing platform,etc.),and analyzes the macro-financial risks such as "industrial hollowing" brought about by the changes of credit market,as well as the failure of total monetary policy control,and puts forward flexible use of recommendations for structural monetary policy.On the basis of clarifying the relationship between asset revaluation and monetary policy,the last part of this paper combines theory with empirical evidence to explore the implementation of monetary policy under the conditions of asset revaluation.This part first expounds the characteristics of China's current monetary policy framework,clarifies the objectives of monetary policy,transmission mechanism and policy tools,and points out the deficiency of the implementation of the current monetary policy.Then it puts forward the challenges faced by China's economy in pursuit of a new stage of high-quality development,new requirements for the implementation of monetary policy,with emphasis on exploring the structural adjustment role of monetary policy.The following empirical study adopts VAR model.On the basis of innovatively dividing structural monetary policy into two categories: quantitative and interest-rate-oriented,the effects of these two types of monetary policies on economic growth,interest rate fluctuation,total market value of listed companies and price level are analyzed empirically.Empirical analysis shows that the effect of interest rate-oriented policy is generally greater than that of quantitative monetary policy,but in the process of implementation,we still need to flexibly select a number of policy combinations according to different backgrounds and policy objectives.Finally,from the two perspectives of "asset revaluation" and "structural adjustment",it is proposed that monetary policy should give full play to its structural adjustment role,respond to asset price revaluation with innovative means and methods,promote the rational distribution of economic structure,guide the flow of funds to key areas of the real economy,while strengthening the effective coordination between monetary policy and macro-prudential supervision,improve the "double-pillar" framework to better prevent and control financial risks,maintain the stability of financial markets and promote the sound development of macro-economy.