Abstract:

In order to study our country's monetary policy, we try to set up a general equilibrium model for a bank's credit behaviors, an enterprise's investment behaviors and residents' consumption behaviors.We demonstrate in theory that, on condition of general equilibrium, a market structure of bank monopoly is disadvantageous to the increase of credit supply; the domestic consumption demand is away from sufficiency because the income effect of reducing interest rates is greater than the substitution effect; an expected inflationary or deflationary situation is not helpful to reduce or increase credit supply and credit demand.So the effect of our monetary policy has been and will be inefficient.

Key words: monetary policy, general equilibrium analysis, credit, intertemporal consumption, interest rate policy