Proactive Structural Simulation of Monetary, Fiscal and Macro prudential policy , monetary transmission mechanism impact on asset prices inflation for crisis early warning

 Warren Huang    OSA   Intl   Operations Analysis/  OSA Global Strategic Management
  San Francisco, Ca., USA  Website :www.osawh.com /     email: wh3928@yahoo.com

 Fenglan Zhang,  Zhejiang University, , China   joycezhang001@yahoo.com.cn,  

                                                                                                                                                                            Abstract

 Global monetary, fiscal, policy excessive rate cuts, liquidity and government expenditure, tax cuts  leading wealth gain feeding  asset (  housing, equities, commodities, bond, debt, derivatives ) prices bubble. Fail to identify and  include the asset prices bubble inflation impact on inflation , interest rate policy decision to indentify  and  doing too little too late to deflate asset prices bubbles in early stage to minimize the loss till it burst at unmanageable late stage.   While poor macro prudential  policy fail to identify , early warning , to raise  banks capital and liquidity requirement  preventing these credit and asset bubble boom and bust leading to  macro and financial system instability risks, crisis  of  2007- current  global financial , banking crisis .
 
This article represent one of  a series of 12 papers covering senior author Huang’s  30 years pioneering tracking  work of  high frequency real time proactive structural simulation of monetary, economic, fiscal policy, monetary transmission impact on last 30 years and current US, China , global currency, assets ( equities, currency, housing, commodities, bond, derivatives)  pricing bubble burst cycles mechanism  and main disturbance impact on output and CPI inflation targeting,  macro, financial, industrial, trading economic systems dynamics Operations Simulation Analysis (OSA) integration .
This proactive structural country, industry, company specific macro-financial decisions analysis, tracking the causes and consequences of  banking, credit , financial  crisis  , macro prudential systemic instability early warning, filling the missing link between monetary and macro prudential policy coordination for financial regulatory reform and Basel III risk management.
Huang ‘s previous work by multivariate nonlinear regression neural net simulation application with Ji X. M. covering early warning for 1980- 1999  China/ global asset prices bubble burst  crisis were presented to ECB, bank of Rome, US Fed, China Asian central banks governors policy, banking, finance  risks control conferences. 
These work represent  Huang training Zhang  for R. Engle  GARCH, Granger  causes and consequences-integration macro, financial econometric  integration , structural VAR for global central banks optimal monetary , fiscal macro prudential policy coordination, monetary transmission mechanism, disturbances impact on out , asset prices inflation targeting ; stock indices, housing, commodities  pricing and risks valuation integration into CPI , interest rate, equities, housing, commodities prices, banking mortgage credit default neural net simulation.
  Our works covering  2001- 2010 , three phases US , China housing, equities commodities prices bubble formation and burst , recovery  cycle, early warning  for 2007-- 2010 and US Fed QE1 and current QE2 impact on real economy, inflation and equities, housing and bond, derivatives prices ,  It also integrating into housing prices bubble and mortgage default rate ( NPL) simulation  and global credit, financial ,European debt crisis due to US housing price bubble burst , global excessive liquidity created   high unemployment inflationary  recession 

Keyword : Proactive structural , US/China/Global, monetary, fiscal policy,  inflation targeting , monetary transmission mechanism , disturbance impact, CPI, GDP, unemployment,  assets (housing , equities, commodity, currency , debt )  prices valuation mortgage default simulation bubbles burst cycle, Financial systems instability , Crisis early warning,  Operations Simulations Analysis

Submitted to Conference on  "Monetary Policy after the Crisis" National Bank of Poland, Warsaw, Friday, 4 March, 2011