The Impact Of Unconventional Monetary Policy Instruments On The Bond Market

After the world financial crisis in 2008,the world economy has shown a sharp recession.In order to stimulate economic recovery,short-term interest rates in various countries have approached zero interest rates.In the case of extremely low short-term interest rates,conventional monetary policy instruments that attempt to stimulate the economy by lowering short-term interest rates will be ineffective.Against the background of the ineffectiveness of conventional monetary policy instruments,central banks have launched a series of unconventional monetary policy(UMP)instruments to cope with the economic recession.The research of unconventional monetary policy has also been paid more and more attention.Therefore,this paper theoretically studies the influence mechanism of unconventional monetary policy on bond market,and empirically studies the non-linear and asymmetric impact of unconventional monetary policy on bond market by using Markov switching model.The following conclusions are drawn and policy recommendations are put forward.This paper holds that unconventional monetary policy is an endogenous monetary policy,which will be affected by macroeconomic variables such as interest rate and output.It has a significant non-linear and asymmetric positive impact on the bond market.The use of unconventional monetary policy instruments to macro-control bond market yields has both theoretical and empirical effects.In the bear market system,unconventional monetary policy has a significant positive impact.Bond yields,however,have no significant effect in bull markets.The estimation results of the transfer probability of regional system show that the duration of bond market in bear market is 11 months,that in bull market is 17 months,and that in bond market,the duration of bull market is longer.Unconventional monetary policy has its advantages in maintaining the stability of interest rate market and the pertinence of adjusting financing cost.In view of different economic conditions,the central government can use a variety of monetary policies in conjunction,so as to enhance its strengths and avoid its weaknesses.In addition,to speed up the transformation of monetary policy instruments from quantitative to price,we should strengthen the transmission mechanism of unconventional monetary policy,which is of great significance to promote the interest rate corridor effect in China.The central bank needs to further develop unconventional monetary policy,improve the regulatory system and enhance the regulatory effect of non-traditional monetary policy instruments.The central bank needs to speed up the innovation of unconventional monetary policy instruments,gradually improve the differential lending system,dynamically adjust monetary policy,and consider expanding the service objects of non-traditional monetary policy instruments.