Abstract Refers to the nonlinear analytical method of Smooth Transition Regression, paper expands the price-based and quantity-based monetary policy rules to the monetary policy rules of smooth transition with the microeconomic foundation. It introduces six exogenous shocks. It measures the nonlinear characteristics of the price-based or quantity-based monetary policy rules by Bayesian estimation method with the data from the first quarter of 1996 to the second quarter of 2016. The simulation results show that: the nonlinear price-based monetary control policy focuses more on the response of inflation, and responses fast to control the inflation effectively; but the nonlinear quantity-based monetary control policy focuses more on the response of output, it responses slowly and can ensure the growth effectively in the process of regulation.
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