Research on the Inflation Control Effect of Monetary Policy——Based on the Price Puzzle
The price puzzle phenomenon means that when the central bank implements the expansionary/contractive monetary poli-cy,the price level falls/rises synchronously in a short period of time,which means that the ability of monetary policy to control infla-tion is restrained.This paper introduces quantitative monetary policy into the classic model of cost channel,and theoretically proves that quantitative monetary policy can also cause price puzzle.The empirical results based on SVAR and VECM models show that there are price puzzles in both quantitative and price monetary policies in China,but the price puzzles in quantitative monetary poli-cies are more serious.By expanding the theoretical model,we can know that quantitative monetary policy not only directly affects the cost of enterprises by regulating the amount of credit,but also superimposes the cost of enterprises by affecting the loan interest rate,which will lead to a more serious price puzzle.The empirical results based on the counterfactual SVAR method support this conclu-sion.The conclusion shows that the quantitative monetary policy is not effective in controlling inflation,and it is suggested that Chi-na should speed up the change of monetary policy regulation mode to price one.
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