Research about dynamic inflation object impacting on our country's economy

摘要

This paper constructs a dynamic stochastic general equilibrium model to analyze the behavior of the unobserved inflation target implicitly included in China's monetary policy in a New Keynesian framework. The empirical evidence suggests that the model is suitable for research on monetary policy and monetary business cycle. The results also support the assumption that China's monetary policy has a dynamic endogenous inflation target which could stabilize inflation. Furthermore, the target responds positively to the productivity shock and negatively to the consumer's demand shock.