Rational Expectations And Research Of Chinese Monetary Policy In Deflation Period

Since 1997, our country's macroeconomy have appeared unprecedented deflation phenomenon. Focus it's substance and extension, causation and harm , how to deal with it, our country scholarship field and economic administration section have developed warmly discussion .Look from the historical back ground, since our country reform and open period there have been a high inflation interval several years, why it now transform to unprecedented deflation phenomenon? This maybe mean a new and deep economic truth, and also widespread be considered an major challenge to our country macroeconomic policy . on the other hand , begin with the <> in 1936, the modern macroeconomics have experienced several revolutions .began from" Keynesian revolution" to the " monetarism revolution" to the " the rational expectations revolution " to the "new Keynesian theories " to the " real-business-cycle model", because there have been so many rival theories and models ,it make the famous economist Blanchard found it was necessary to release a statement in his macroeconomics textbook:" we truly believed there existed an useful macroeconomics ".How to find out a balance between the complex realistic economies and abundance theories, has been a key task to economists. This paper want to use rational expectations and its profound influence to the monetary theory , analysis our country's deflation, try to complete this task and obtain some new way and results of research .This paper is divided into six parts totally.The chapter 1 is introduction. Include a topic of discussion, review of literature, the way of research thoughts and method.The chapter 2 , introduce the concept of rational expectations, at first give the rational expectations definition, the rational expectations hypothesis asserts to the special economic variable, people's subjective distribution are equate to substantial distribution, in fact, the hypothesis assume people know real models(the system of data production ),so it shortened the learn process. Then expatiate the key role of rational expectations in the below theories: Share prices " random walk" /'efficiency markets" ," permanent income hypothesis" " life-cycle" of consumption, ," super inflation theory ", "tax smoothing" and the design of economic stabilization policies.The chapter 3 , firstly divide the development of monetary theory into two stages, regard Phillips curve as the center, deeply expatiate the key character of monetary theory that before and after the rational expectations .In Keynesian models including simple adaptive expectations , the trade-off of unemployment ?inflation is permanent, so the policy makers could launch an inflation to decrease the rate of unemployment .InFriedman's famous natural rate hypothesis which include adaptive expectations ,which distinguished short-term and long-term Phillips curve .In the short-term, because the unexpected inflation ,the models assert there may be a temporary trade-off between unemployment an inflation, but could not exists a permanent trade-off between unemployment and inflation . The conclusion seems to be through out continuous inflation , the rate of unemployment can still be lower than the natural rate . But the paper prove that adaptive expectations could not leads to the natural rate hypothesis by a simple model, in contradiction , these two hypothesis are conflict .If incompletely expectations is the unique cause of prices rigid, that only the rational expectations hypothesis comes to the natural rate theory .Ultimately, gave the Lucas supply curve include the rational expectations . the key thinking is : A producer could observes the variance of its product price, but he does not know that this is relative price variance or general price .The variance of the relative price change the output, but the variance of the general price would not change the output .Rational reaction of the producer is, consider a part of variance is general prices movement , the other part is the rela...