The Development Of China's Stock Market Research On The Impact Of Monetary Policy

An outstanding trend of global economic and financial structure evolution has been the continuing development of the capital market whose core is the stock market since the 20 century 90s. With the growing expansion of the size of the capital market worldwide, the stock market's impact on national economy and international economy soars. The Latin American and Asian financial crises are vivid examples of this impact. Under this background, the relationship between monetary policy and stock market becomes the most frontier issue of the current monetary theory researches. So I make a research about the impact of the development of stock market on monetary policy.The text of this thesis consists of five chapters. Chapter one analyzes the role of the development of the stock market on the national economy growth and the challenge the monetary policy faces. This chapter analyzes the impacts the stock market played on macro economy since the founding of shanghai stock exchange in 1990. It also illustrates the challenges the monetary policy faces due to the impacts the stock market played on macro economy. Chapter two makes an analysis about how the stock market exerts impacts on the transmission mechanisms of the monetary policy and inspects five channels through which the stock market affects the transmission mechanisms. These channels are: Tobin's q theory, Modigliani's wealth effect, the liquidity effect, the non-symmetrical information effect and Kalph Chami, Thomas F. Cosimano, Connel Fullenkamp's inflation tax. This chapter also makes a positivism analysis about these five channels in China. Chapter three analyzes the impacts of the development of the stock market and the violation of the stock price brings on the money demand, money supply, money structure and currency's circulation velocity. It also makes a positivism analysis based on the previous research. Chapter four discusses should the central bank introduce the violation of the stock price into the range of the price stabilization. The final aim of monetary policy is stabilizing the currency value. Chapter five concludes this thesis and proposes several suggestions about perfecting monetary policy.