Abstract: Using the MS-VAR model, this paper analyzes the asymmetric effects of monetary policy under the sticky-information theory framework and conducts empirical test. The results show that quantitative loose monetary policy is beneficial to push economic growth in the period of low and stable inflation expectation. The output effect of expansive money supply is not significant and increasing interest rate is not conducive to regulating long-term inflation when the inflation expectation remains high and volatile. Meanwhile, the inflation shows an obvious trend of consistent volatility under the shock of monetary policy. As a result, central bank should be more concerned about the critical effects of inflation expectation on monetary policy regulation, promote the transparency and credibility of monetary policy signals, and offer rational guidance to economic subjects’ expectation.
Keywords: Monetary Policy, Sticky-Information Theory, Inflation Expectation, MS-VAR Model
source:Finance & Trade Economics ,No1,2014