The analysis of temporary increase and permanent increase in money supply using IS-LM model——in comparison with DD-AA model;

With the traditional IS-LM model and the comparative static analysis,this paper investigates fiscal policies capability in smoothing economic fluctuation since China s reform and opening-up.

This paper sets up simultaneous equation based on the IS-LM model,using historical data between 1980 and 2000,and makes the regression analysis by the method of two stage least squares.

In the monetary theory of BOP, Using IS-LM-BP model and AS-AD model in the condition of fixed exchange rate and incomplete capital flow, the article analyzed the relation among capital flow, money supply and price, then study empirically the influence relation between capital flow and deflation taking place from 1997 to 2002.

IS-LM-BP model can illustrate such complicated circulation mechanism and its result.

Firstly, in light of the basic national situation of dollar peg quasi-fixed exchange rate system and asymmetric capital regulation in China, this article modified the typical IS-LM-BP model by introducing the restriction of economic openness so as to embody the operating manner of economy and the environment of policies, and proved through mathematical analysis that, the increase of

Among the most representative are Rankin model,CC-LM model and AD-PA model.

This paper implanted credit risk and capital restraint in the Bernanke-Blinder’s CC-LM model, based on the expanded general equilibrium frame discussed the mechanism of credit risk appraisal and capital adequacy ratio supervision’s influence to the validity monetary policy.