Asset price channels refer to a way in which policies affect the real economy. It is mainly affected by the impact of the behaviour of different financial institutions and central banks on markets and their listed platforms, investors and the price of their acquired assets. Policies of moderation, monetary policy, financial reform and other types of policies can influence economic growth and social development through asset price channels。
I. Interest rate transfer mechanisms
The interest rate transmission mechanism, also known as the interest rate effect channel, is one of the main ways in which policies affect asset prices. Based on changes in interest rates, asset prices may be directly affected and market and institutional investors may be affected by a variety of factors when determining the return on financial assets, so that interest rate transmission mechanisms can significantly affect asset prices。
Interest rate transfer mechanisms can gain from policy implications, and if a central bank hike leads to higher short-term interest rates, the resulting changes will be channelled to other investment products, and investors will shift their investments to financial instruments that can generate higher returns。
Money supply transfer mechanisms
The money supply transfer mechanism, also referred to as the channel of monetary effects, refers to a model by which central banks change the impact of money supply on the real economy, particularly financial markets and asset pricing, in order to achieve policy objectives. Specifically, when central banks cut liquidity, the money supply is reduced and the liquidity ratio increases. At this point, there is a risk that investors in the market may gain more profit and, in order to increase the rate of return on investment, they may change the structure of the assets they own, thereby changing asset pricing。
Iii. Funding constraints
Lack of access to finance is another major mechanism through which policies affect asset prices. Governments can influence financial flows to the real economy by reducing currency issuance, curbing inflation, curbing inflation and changing economic structures and lowering price levels. Another policy of financial scarcity is the regulation of monetary policy, which can affect the cost of finance and curb inflation, thereby changing asset pricing in the financial sector。
Savings transfer mechanisms
Savings transfer mechanisms are another effective channel for policies to influence asset prices. When governments increase savings, investors may reduce investment and asset prices, thereby affecting economic growth and social development. On the contrary, when governments reduce savings, investors may increase investment and asset prices, thereby affecting economic growth and social development. Specifically, when governments reduce savings and strengthen fiscal policies, they can reduce the cost of fiscal spending and thus raise asset prices; on the other hand, by increasing savings and reducing fiscal spending, they can reduce the cost of fiscal spending and curb asset price increases。
In the light of the above, there are four main policy impacts on asset prices: interest rate transfer mechanisms, money supply transfer mechanisms, financial constraints and savings transfer mechanisms. In the macroeconomic framework
