Research On The Influence Of China’s Financial Cycle On The Regulation Effect Of Monetary Policy

Several debt crises and financial crises led to sharp fluctuations in the financial market.The frequent occurrence of financial crises had a great impact on the macro economy.Under the condition of rapid economic growth and basically stable prices,the cyclical occurrence of financial crises led to economic recession.Academia and monetary authorities began to reflect on the important role of financial cycles in monetary policy regulation,At the same time,the differentiation between financial cycle and economic cycle puts forward higher requirements for the traditional monetary policy with the single goal of stabilizing prices.In view of this,starting from the basic facts of China’s financial cycle,this paper takes the financial cycle fluctuation into account the monetary policy regulation mechanism,and studies the impact of the financial market cycle fluctuation on the regulation effect of China’s monetary policy.On the basis of combing the existing theories related to financial cycle and the research related to financial cycle and monetary policy,this paper uses the method of combining qualitative research and quantitative research.Firstly,this paper analyzes the basic facts of the operation of China’s financial cycle,and finds that: first,the fluctuation length and amplitude of China’s financial cycle are greater than that of the economic cycle,and the length of the financial cycle is about 10 years;Second,there will be large economic cycle fluctuations near the peaks and troughs of the financial cycle,and the state of the financial cycle has a significant impact on the macroeconomic situation;Third,the superposition period of financial cycle and economic cycle will amplify economic fluctuations and prolong economic prosperity or recession.Secondly,based on the measurement of financial cycle,this paper divides China’s financial cycle.Using dynamic correlation analysis and time difference correlation analysis,it is found that there is a time lag in the regulation effect of monetary policy under the condition of financial cycle.Thirdly,this paper analyzes the influence mechanism of financial cycle on the regulation effect of quantitative monetary policy and price monetary policy.This paper constructs TH-SVAR model to empirically analyze the effect of price monetary policy on regulating output and inflation at different stages of financial cycle,and constructs autoregressive distribution lag(ARDL)model to analyze the impact of financial cycle on the effect of quantitative monetary policy on regulating output and inflation.The study found that whether in the expansion stage or contraction stage of the financial cycle,the regulation of monetary policy on output lags behind that of inflation.Compared with the impact of monetary policy on output regulation under the change of financial cycle stage,the impact of monetary policy on inflation regulation is more intense.Finally,according to the research conclusions,this paper puts forward the following policy suggestions: first,scientifically compile the financial cycle index and build a multi polarization detection index system;Second,we should guard against the deviation between the financial cycle and the economic cycle and ensure that finance can effectively support the development of the real economy;Third,maintain the "combination of volume and price" regulation mode,pay attention to the use of structural monetary policy,and give full play to the role of the dual pillar policy framework of the combination of monetary policy and macro Prudential policy.