The Performance Of Monetary Policy In Economic Cycle And Economic Fluctuation

The classical theory believed that the currency presents the neutrality in the entity economy, but the scholars have a fierce argument about this, and the empirical analysis supports the currency non- neutral viewpoint. This paper is a study on the monetary policy of China. Since China's reform and open policy, the economic of China has obtained a great achievement, but the monetary policy of China is not mature. This kind of weakness can be observed though the utilization of monetary policy tool, but also though the goal of monetary policy and the basic ideas of monetary policy. The scholars'appraise on economic policy effect is mainly based on whether it can promote the economic growth. This article certainly does not deny that promoting economy growth is an important target of an economic policy, but this is not enough. This paper points out that the good economic policy not only can promote the economy, but also can increase the economy stability. The economic cycle and the economic fluctuation are the economic inherent phenomenon. This paper discovers that monetary policy has different performance in the economic cycle and economic fluctuation through the empirical analysis based on the discrimination of economic cycle and the economic fluctuation, and produces the corresponding theory explanation. Moreover, through carrying on the review and the analysis of the monetary policy of China, summarizes question about our country monetary policy operation. Then author draw the conclusion that the Central Bank of China should take the stable price as its ultimate goal based on the study. This paper contains two parts.The first part draws question based on the monetary policy of China. China has experienced a cyclical economic growth since 1978, and the money supply also has experienced cyclical changes. Is there any relationship between economic growth and monetary policy? What's more, the economic growth of China also includes short-term fluctuations, whether there is a link between short-term fluctuations and the changes of monetary policy? After these issues being broached, author gives the simple introductions of this paper.The second part contains four chapters. The first chapter mainly introduces the concept and theory of economic cycle, and the concept and theory of economic fluctuation. Then author gives the definition of the economic cycle and the economic fluctuation based on research needs, and carry on the detailed elaboration about the two definitions` relation and difference. The second chapter is the core part of this paper. In this chapter analyzes the economic cycle and economic fluctuation of China using the Granger test and other methods of Econometrics, then discovers the performance of monetary policy in economic cycle and economic fluctuation. Thus obtains the main conclusion of this article. In the third chapter author introduces the history of monetary policy of China, and find out that the effect of the monetary policy of China is not very good. I give the reason from the view of the target of the monetary policy of China. The fourth chapter gives a conclusion. Though explaining the function of monetary policy based on my research, author proposes the core viewpoint of this paper.This paper mainly has two new ideas. First, this paper separately gives the definition of the economic cycle and the economic fluctuation. Majority scholars think these two different concepts have the same meaning, but in this paper, they all have their own definitions. And it's the first time to find out these two concepts` difference. Second, author does this research work from new angle. Very few scholars analyze the relation between monetary policy and economic cycle, and no scholar analyzes the relation between monetary policy and economic fluctuation .But these two are all important question. Through this research work finds out more information between monetary policy and economy.