On the Choice of Monetary Policy Tools for Regulating Asset Prices:Based on MS- FAVAR Model

This paper constructs MS- FAVAR model that contains of monetary policy tools,asset prices,and common factors. Through the generalized impulse response function,analyzing response of asset prices to monetary policy tools. Empirical analysis shows that the monetary policy tools have significant effects on asset price,need to include asset prices in monetary policy; influence of different monetary policy tools of asset price is different,and as the state of the economy in different significant differences exists. Providing a scientific basis for the monetary authorities to choose the appropriate monetary policy tools to regulate asset prices.