Asset Price Volatility And Monetary Policy Research

The1980s, with a large number of Japanese products enter into the worldmarket, Japan’s current account surplus increased significantly. after the Plaza Accord,in response to the tightening effect brought about by appreciation of the yen, the Bankof Japan maintain a long-term low interest policy, At the same time,the Japaneseeconomy attracts a large number of international investment, also Japan’s domesticinvestment in manufacturing began to enter into asset market in order to get morebenefits, a large number of Japanese commercial banks, credit through a variety ofways to enter the stock and property markets, real estate and the stock market,So lots ofcapital into the real estate and stock market, in Japan as a whole showed a boom in assetprices, while Japan’s inflation was showing a low inflation, the Bank of Japan (BOJ) solet down guard, take no effective control to the asset price bubble, ultimately it makesthe Japanese stock and real estate prices reach an unsustainable level,when90-yearasset price bubble burst, Japan fell into a long-term economic recession. At thebeginning of the21st century, the Internet stock bubble and the2009subprimemortgage crisis, The United States economy have almost similar features in the CPIindex as the representative of low inflation and asset price inflation created a bubble, Atthe final,the asset price collopse caused the economic impact. by Volatility of assetprices,so the monetary policy operations, especially in the inflation targeting monetarypolicy how to stabilize inflation and control of the asset price bubble, especially afterthe bubble burst, how to take the challage that the asset price bullble make the imblanleof the balance sheet, and make the economy stable,because of the existence of thefinancial accelerator accelerate the decline of the economic crisis have become animportant research content.The volatility of asset prices have an impact on consumption and investmentthrough the wealth effect and the effect of Q, thus affecting aggregate demand, and thushave some impact on inflation,so this paper generally believed that asset prices can become a leading indicator of inflation to a certain extent, so academic and practicalcircles also began to study include the exchange rate, financial status, including the realestate market prices and the stock price index as a leading indicator of future inflation.The operation of monetary policy should react to asset price volatility, the morecontentious issues in the academic, because the volatility of asset prices are toofrequent, if the operation of monetary policy directly react against the asset price,Theother sectors of the economy welfare is adversely affected. But the Asset price bubbleburst, the role of the financial accelerator makes the economic recession and decline, oreven a financial crisis as well as the economic crisis. Therefore, Besides the centralbank under inflation targeting framework react to asset price volatility onmacroeconomic adjustment, If we have the micro-supervision to supervising excessivecredit behavior of the financial institutions to avoid asset price bubbles?When the terms of the economic face the fluctuations in asset prices, even the assetbubble burst in economic impact, only through optimal operation in the macro leveloften is not enough, the sharp fluctuations in asset prices tend to be within the financialsystem caused by the credit expansion, how to effectively carrying out macro-monetarypolicy transmission at the same time have a financial General-wide micro-regulatorytools to control the excessive expansion of credit to the stimulate the asset price bubblesand eventually the bubble burst in the formation of financial and economic crisis.Fluctuations in asset prices in a reasonable space within the scope of this paper to thelast chapter.