An Study on the Optimal Monetary Policy Rules for Asset Price Volatility

摘要

After considering the Time inconsistency of the monetary policy(Discretion; Rules; Cheats), By presetting the framework of monetary policy rulebased monetary policy and comparing the function of central bank's welfare losses towards whether reacting to stock price fluctuation, This paper finds that the optimal solution for central bank is to control stock price in a small range properly and it will improve the welfare of the Central Bank and overall benefit of the stability of output and inflation; Under the operation framework of our current monetary policy is an Optimal Monetary Policy; By a reasonable choice towards medium indexes, The central bank can control stock price fluctuation.