Abstract: In the research on the impact of monetary policy on the level of risk taking by economic entities, which in turn affects the mechanism of financial cycle fluctuations, relevant research based on risk taking channels is relatively mature. Unlike previous studies that have focused more on the actual stance of monetary policy, this article explores the time-varying mechanism of the impact of quantitative and price based monetary policy response functions on financial cycle fluctuations based on the channel of monetary policy response functions. The empirical results of rolling regression show that the sensitivity of monetary policy to credit fluctuations mainly affects the volatility of the financial cycle, regardless of whether it is quantitative or price based monetary policy rules. However, under price based monetary policy rules, when observing financial cycle fluctuations from a credit perspective, the difference in the impact of monetary policy credit sensitivity and monetary policy asset price sensitivity on the financial cycle is relatively small; Compared to price based monetary policy rules, the sensitivity of monetary policy to credit fluctuations is more significant under quantity based monetary policy rules, and to some extent, it shows a trend of expansion over time. The innovation of the article lies in emphasizing the fact that monetary policy affects financial cycle fluctuations through the policy response function channel rather than the narrow risk-taking channel that has been widely studied in previous studies, and constructing an econometric model to describe in detail the time-varying mechanism of the impact of monetary policy response function channels on financial cycle fluctuations.

Keywords: Monetary policy response function; Financial cycle; Quantitative monetary policy; Price based monetary policy; Rolling regression; Time-varying mechanism;