Abstract：The report of the 20th National Congress of the CPC emphasized that“we will adhere to a high level of opening up to the outside world and accelerate the construction of a new development pattern with a large domestic cycle as the mainstay and dual domestic and international cycles promoting each other.”The solid promotion of the high-level opening-up strategy requires not only the coordinated application and systematic support of the internal policy system but also close attention to the impact of external environmental changes. We should do a good job in identifying and warning against external uncertainties,deconstructing sources,responding to policies,and effectively building a policy“firewall”mechanism to prevent major external imported risks,which will not only help the process of promoting high-level opening-up but also help improve China's macroeconomic modernization and governance ability as well as maintain economic and financial security and stability.This study separately measures external uncertainty shocks and dynamically screens the sources of shocks. By extending the classical Mundell-Fleming model,we analyze the theoretical mechanism of external uncertainty factors on the effectiveness of monetary policy and conduct an empirical test. Then,we further examine the nonlinear characteristics of the impact of external uncertainty tail shocks on the effectiveness of monetary policy. The study finds that extreme events push up China's external uncertainty;it is more important to be alert to uncertainty shocks from foreign consumption,bond markets,and bank credit. External uncertainty can affect the effectiveness of monetary policy regulation through the“risk aversion channel,”the“interest rate channel,”and the“exchange rate channel.”The right-tail shocks of external uncertainty weaken the effectiveness of quantitative and price-based monetary policy more significantly. Influenced by external uncertainty,tight interest rate policy may increase the risk of economic stagflation in the short term. The effect of price-based monetary policy is obviously disturbed by external uncertainty shocks. External financial uncertainty has a greater impact on the effectiveness of monetary policy than external economic uncertainty.The marginal contributions of this study are mainly in the following aspects. First,it dynamically identifies the sources of external uncertainty shocks and clarifies the driving mechanism of external uncertainty factors qualitatively. Second,it establishes an early theoretical framework that includes external uncertainty and monetary policy instruments,provides theoretical clarification of the mechanism of the impact of external uncertainty on the effectiveness of monetary policy, and provides more informative empirical evidence. Third,we further explore the nonlinear impact of extreme tail shocks of external uncertainty on the effectiveness of monetary policy from a new perspective of different quartiles.This may provide a useful reference for policy authorities to effectively formulate macroeconomic policies in the process of fully promoting a high level of openness and mitigating the negative impact of extreme external uncertainty events.The policy implications are as follows,first,build an early warning indicator system that can effectively identify external uncertainty shocks and effectively ensure the safe and stable development of China's economy. Second,stabilize domestic and foreign investors' good expectations of the domestic macroeconomic and financial markets and continue to promote interest rate market reform complemented by appropriate capital account regulation measures. Finally,when external uncertainties increase and domestic economic downside and deflationary pressures surge,it is necessary to coordinate the use of expansionary quantitative and price-based monetary policy tools. When the domestic economy is overheated and foreign uncertainty shocks coexist,more reliance should be placed on tighter quantitative monetary policy tools to ease inflation,and it is also necessary to further strengthen macroprudential supervision measures for cross-border financing to ensure that structural monetary policy dividends reach important domestic market players directly.

Keyword：External Uncertainties; Mundell-Fleming Model; Risk Aversion; Exchange Rate System; Monetary Policy;