The Influence of Economic Uncertainty on the Effectiveness of Monetary Policy

Jiaxin Yu

《World Scientific Research Journal》 7卷3期 (2021/03) Pp. 300-308

https://doi.org/10.6911/WSRJ.202103_7(3).0039

摘要

Economic uncertainty is an important factor affecting the effectiveness of monetary policy. This paper begins with a theoretical perspective and analyses the impact of economic uncertainty on the effectiveness of monetary policy in light of public expectations, credit rationing and investment behavior, and policy lags. At the empirical level, the monthly data of macroeconomic climate index from January 1996 to December 2017 was selected in this paper. Seasonally adjusted and combined with the GARCH model to analyze the impact of economic uncertainty on the effectiveness of monetary policy. The empirical analysis found that the impact of economic uncertainty will weaken the effectiveness of monetary policy by suppressing the growth of the national economy. This conclusion manifests that in order to enhance the effectiveness of monetary policy in regulating the economy, economic uncertainties need to be taken into account. Monetary authorities need to pay close attention to the guiding role of information disclosure in the reasonable expectations of the public. At the same time, we must focus on perfecting the two‐pillar regulatory framework for monetary policy and macro-prudential policies, and use the synergies between the two to cope with the impact of economic uncertainty, further deepen the reform of interest rate liberalization, and improve supporting mechanisms. In the use of traditional monetary policy tools to regulate the economy, we must gradually introduce innovative policy tools with shorter time lags to cope with the adverse effects of economic uncertainty.

關鍵字

Uncertainty ； Monetary Policy ； Expected Management ； Investment Efficiency ； External Time Lag

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