Abstract: This paper constructs a DSGE model with four subjects to study the regulatory effect that China's mixed monetary policy has on the economy and the wealth effect of stock market. This paper makes an innovative attempt to take account of the mixed monetary policy which is closer to the practice of China's monetary policy, and adds stock market into the DSGE model. Starting from the household demand side, this paper studies the transmission mechanism of how the mixed monetary policy plays its effect first on stock price and then on residents' consumption, and uses China's macroeconomic data to calibrate and estimate the parameters of the model. It is found that under the framework of mixed monetary policy, technological progress can lead to a higher level of total output, monetary liquidity, stock price and consumption, hence resulting in a Pareto improvement; Mixed monetary policy can increase total output, inflation, stock price and consumption in the short term; The wealth effect of stock market is highly related to the consumption level of stockholding households. When stock price rises, households will increase their current consumption to improve the total utility of households during their existence, and vice versa. Finally, this paper puts forward some policy suggestions on bringing the stock market into the regulatory framework of monetary policy, accelerating the transformation of monetary policy toward price-oriented type, giving play to the transmission channel of stock market monetary policy and supporting the real economy.

Key words: mixed monetary policy, dynamic stochastic general equilibrium, wealth effect of stock market