Stock Price,Monetary Policy and Macroeconomic Fluctuations

This paper estimates the New Keynesian model including stock price using simultaneous equations method,analyzes the relationship between stock price,monetary policy and macroeconomic fluctuations.The main findings are as follows:firstly,there is close relationship between stock price and economic fluctuations;secondly,the monetary policy really smoothes economic fluctuations.Then this paper compares the effect of different monetary policy rules,and finds that it helps to minimize the fluctuations of macroeconomic variables by including stock price misalignment into monetary policy rule.