Monetary Policy Analysis Based On New Keynesian Model

This paper mainly summarizes the analysis of monetary policy based on a New Keynesian model. Narrow monetary policy is all the guidelines and measures of central bank for adjusting money supply and merest rate aiming for affecting macroeconomics,for determined economic aims,using all kinds of tools.Interest rate policy is an important part of monetary policy,and also is one of the most important measures when putting monetary policy into practice.As a key tool of implementing monetary policy, interest rate policy is given more and more importance.Interest rate was only adjusted 9 times between 1949 and 1978 in China.However, central bank stresses more and more importance on interest rate, and adjusts interest rate more and more frequently.During the early days of 1970s,1980s and 1990s, the standard model includes the hypothesis of nominal rigidity, and affiliates the amount of money with overall output.In the recent years,the key point of researching is coordinating the models with the optimal behaviors of typical household.This paper takes Keynesian framework.The rest of this paper is arranged as follows.In Section 1,some knowledges of mathematics related are given.In Section 2,we introduce some knowledges of monetary policy and gives a brief introduction of recent researches in this field.In Section 3,we build a basic Keynesian model from the respects of household and factory .In Section 4,we concentrate on several kinds of interest rules, with respect to inflation and output gap, and the conditions of equilibrium.In Section 5,we discuss the question of can money matter in the interest policy. In the end, we discuss the marketing of interest rate.