Research on the Interaction Between Monetary Policy and Financial Asset Prices
DOI:
https://doi.org/10.31181/jidmgc11202525Keywords:
Monetary policy, Financial asset prices, ChangeAbstract
As the core tool of macroeconomic regulation, monetary policy is widely used around the world to promote economic growth, stabilize inflation, increase employment, and balance international payments. By combining theoretical analysis with empirical research, this paper systematically reviews the main theoretical and empirical findings on the relationship between monetary policy and financial asset prices at home and abroad, focusing on the mechanisms through which monetary policy influences financial asset prices, and analyzing the volatility of these prices through changes in market interest rates and exchange rates. This paper aims to reveal the intrinsic relationship between monetary policy and financial asset prices and their potential issues. Therefore, a vector autoregressive (VAR) model is constructed to analyze the dynamic, time-varying relationship among money supply, interest rates, and exchange rates. The research results show that an increase in money supply has a significant impact on interest rates and exchange rates, which in turn triggers changes in financial asset prices. Based on these conclusions, this paper proposes giving full play to the regulatory role of monetary policy, further deepening the market-oriented reform of interest rates, and optimizing the monetary policy transmission mechanism to enhance its positive impact on the financial market. This study provides new empirical evidence for understanding the relationship between monetary policy and financial asset prices and also offers useful theoretical insights and practical guidance for policymakers.
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