Conventional Monetary Policy And Macroeconomic Effects Of Unconventional Monetary Policy Research

With the world's economic integration process continues to advance, the use of monetary policy has become complicated in exchanges and cooperation in various countries. Academic researches on the effects of monetary policy are quite profound from the using of traditional monetary policy to unconventional monetary policy. Appropriate monetary policy is a solid foundation for sustained and stable development of the national economy, it is necessary to study conventional monetary policy and unconventional monetary policy whichever is better regulate the macro liquidity, but also with policy predictability and effectiveness, create a more stable financial environment.To study the different effects of conventional monetary policy and unconventional monetary policy on macroeconomic, the paper make the analysis based on the situation in Japan, using Japan's monetary policy data from 2004 to 2013, splitting these two currency policies implemented by central bank, and embed in the DSGE analysis framework. The DSGE model using interest rate policy as conventional monetary policy and using expanding the range of eligible collateral constraint conditions as unconventional monetary policy. It is an open economy dynamic general equilibrium model (DSGE model) contains household sector, firms, commercial banks and the central bank as economic agents. And using the parameter calibration method and the Bayesian estimation method to estimate Japan's DSGE model referring to a series of Japan's Institute of Finance reports. Analyzing these two monetary policies by impulse response in respectively, and comparing the extent of the impact of economic variables'reaction in different monetary policies.Empirical studies show that:when the central bank start to implement conventional monetary policy, it will result in minor fluctuations in economic variables in the short term, and then a period of time will reverse swings, it takes a long time to reach steady state. And the implementation of unconventional monetary policy will result in the short-term fluctuations in economic variables, and will soon reach the steady state. Finally,according to Japan and China's current economic situation, policy recommendations are given below. Japan's conventional monetary policy effectiveness is already minimal, continue to use quantitative easing monetary policy will promote economic recovery, weaken deflationary liquidity operations and meet the requirements, but due to the current quantization the adverse effects of loose appeared. So Japan's monetary authorities should continue using unconventional monetary policy of quantitative easing, while attention to controlling the size. Transition from easing quantity to easing credit can suppress bad price rising. In comparison, China's economic situation is differ from Japan, interest rate policy still has much room for adjustment under the new normal features. It is recommended that China's monetary authorities should continue using conventional monetary policy, and study abroad unconventional monetary policy experiences, recognizing that unconventional monetary policy plays a prominent role in releasing liquidity in the short term.