Impacts of monetary policies on the stock market based on agent

The existing measurement analysis methods used to study the relationship between monetary policies and the stock market just take macro-historical data into account and do not consider micro-individual differences as well. This article overcomes these shortcomings by using Agent-based method. We simulate different micro-individual behaviors and then construct an artificial stock market in the computer according to the behavior rules and evolution rules defined by Kyle. We study the impacts of the interest rate and money supply on the stock prices in this artificial stock market. The results show that, (1) interest rate can adversely affect the stock price significantly; (2) money supply can hardly influence the stock price.