The Cycle Relationship between China's Monetary Policy and Inflation——An Empirical Study Based on Monetary Condition Index

摘要

Based on interest rates,foreign exchange rates and money supply,the paper constructs China's nominal condition index to represent its monetary policy,and uses wavelet transformation method to separate singly the index and inflation index into four time series of short,medium,long and entire cycles,then compares four time series of China's nominal condition index with those of inflation index.The comparison results show that China's nominal monetary condition index has a good prediction effect to inflation and the relationship of them has the characteristic of Consistency,symmetry,instability and long memories.