Monetary Policy, Economic Policy Uncertainty And Economic Growth

In the background of the new normal,the economic development environment in China is increasingly complex and volatile.In response to the changing policy environment,monetary authorities frequently adjust monetary policy,making the public and manufacturers unable to accurately grasp the future development direction of the economy,resulting in economic policy uncertainty.Will the change of economic policy uncertainty affect China's economic growth and the effect of monetary policy? What kind of monetary policy should the monetary authorities implement to maintain the quality of China's economic development?Based on previous studies,this paper selected monthly data from January 2000 to December 2019 to study the relationship between economic policy uncertainty,monetary policy and economic growth.Firstly,the traditional IS-LM model was extended,and the IS-LM theoretical model including the uncertainty of monetary policy and economic policy was constructed and deduced from an asymmetric perspective to analyze the action mechanism of monetary policy and economic policy uncertainty on economic growth.Then use the NARDL Model to study the short-term and long-term asymmetric effects of monetary policy and economic policy uncertainty on economic growth.Finally,the robustness of the empirical results is tested and the threshold regression model is used to test whether the uncertainty of economic growth will weaken the effect of monetary policy.This helps to remind the policy makers to reduce frequent policy changes and maintain policy consistency and stability in the implementation of economic policies.It is of great significance to realize the steady transformation of Chinese economic growth model and promote the sustainable development of the economy.Through mechanism analysis and empirical study,the results show that:(1)the impact of economic policy uncertainty,interest rate and money supply on economic growth is obviously asymmetric in the short term,and symmetric in the long term.(2)There is an asymmetric co-integration relationship between the growth rate of interest rate money supply and economic growth,which presents an asymmetric transmission effect in the short term.The increase of interest rate and the decrease of money supply will restrain economic growth,and the increase of interest rate and the decrease of money supply will have a greater impact on economic growth than the decrease of interest rate and the increase of money supply.In other words,the tightening monetary policy has a more significant adjustment effect on economic growth.(3)The increase of economic policy uncertainty will inhibit economic growth,while the decrease of economic policy uncertainty will promote economic growth,and economic growth has a greater response to the positive impact of economic policy uncertainty.Economic policy uncertainty in some extent will weak the regulatory effect of monetary policy on economic growth.In particular,when economic policy uncertainty is large,monetary policy has little effect on economic growth,when economic policy uncertainty is low,the control effect of monetary policy on economic growth.