The Phillips curve relationship and the inflation-money growth relationship which are very classical in macroeconomic study are tested by China data in this paper.

This paper decomposed monetary growth uncertainty into two components:the untertainty which reflecting mac- roeconomic policy changes and the uncertainty about economic shocks by applying time-varying parameter Markov regime switch model and then investigated the effects of the two different sources of monetary growth uncertainty on macroeconom- ic activity based on monthly data from 1994 to 2005.