In Open Economy Monetary Policy Asymmetric Research

Broadly speaking, asymmetric effects of monetary policy have two aspects:the asymmetric effects of monetary policy in the direction and the asymmetric effects of monetary policy in the economic cycle. This paper based on the former that means the different impacts of the same magnitude of expansion and contraction of the currency policies on economic growth. With the deepening of the opening-up of china,china will have more chances to contact with outsides. In this case, the implement of the monetary policy will be more difficult.so it is important to research the asymmetric effects of monetary policy in open economy.we first reviews the implement of the monetary policy during1993to2011.Then we study the asymmetric effects of monetary policy in open economy, using China’s quarterly date from1993to2011.we select M2as the monetary policy’s variable, select output and CPI on behalf of the ultimate goal. Besides, we also take exchange rate and foreign exchange reserve into account. The results of the study show the existence of asymmetric effect of China’s monetary policy. First, The effect of loose monetary policy on GDP is greater than the impact of tight monetary policy on GDP while introducing exchange rate or not. But the effects of different direction of monetary policy on GDP become weak while introducing exchange rate. And this asymmetry is due to the joint action of the effects of monetary policy on investment, consumption and net export. Meanwhile, the effects of monetary policy on net exports is stronger than that on investment and consumption. Second, The effects of loose monetary policy on CPI are all greater than the impacts of tight monetary policy on CPI while introducing exchange rate or not. but the effects of the tight monetary policy on CPI become strong while introducing exchange rate. And the effects of the loose monetary policy on CPI become weak while introducing exchange rate. so the impacts of different direction of monetary policy on the economy exist asymmetry.