The Monetary Policy Of The Dynamic Optimization And Adjustment

The monetary policy is the macro policy that the central bank can administrate the real economic through adjusting namely variable. Because of the divergence of economical structure, monetary policy, as an instrument to control macro-economic, can cause different influence to the different economy. Monetary policy keeps on taking place accompany with the economy movement, the central bank must carry on the dynamic optimizal monetary policy.Using dynamic optimization must set out from the whole economic system. The policy maker must take the continuous economy as discontinuous time-list, and make selection into the multi-step programme. Dynamic optimal monetary policy is the best fit instrument to pursuit the maximum profit or minimum loss under the binding condition of economic instructure. It is true that economic unit will format their expectation in the multi-step programme, the central bank must make selection under this expectation. The research into the world is just unfolding. This text will carry on the system research to the tool, target, economic structure and restraint in the dynamic optimal monetary policy frame.The paper is made up of six chapters.Chapter 1 describes the monetary policy target and various operation tools. The classic economics thinks that the target includes economy growth, full employment, commodity price, and international balanced budget. Financial theories increase the financial stable target from practice and theries angle. In addition to above five targets, there are some targets under the particular condition. It is benefit to establish some intertarget. The monetary policy tools include the quantity tools and price tools. The central bank selects to use them under different economic condition. I use the Pool Model to examine the applicability of different Chinese monetary policy tools. The conclusion is that quantity tools and price tools need to be made up.Chapter 2 is about the monetary policy transmission mechanism. Because of the difference of elastic of currency in each market, there are particular monetary policy transmission mechanisms to fit for the particular economic structure. The central bank that pursues the different economic target must optimal their policy according to the mechanism. Monetary policy transmission mechanism will change as the economic conditions change. The main method to measure mechanism is the method of VAR. In this text I use the method of VAR to measure Chinese monetary policy transmission mechanism. The conclusion is that both price tools and quantity tools are effective but have time-lag difference. Credit channel is more obvious, and interest rate channel has the trend to enhance gradually.Chapter 3 discuss how to optimal monetary policy under different monetary rules. Under the fixed monetary growth rule, the central bank must change the growth rate according to the actual conditions. Under the namely income rule, the inflation gap and output gap will be unstable. Under the Taylor's rule, the optimal monetary policy should be link the expectation of inflation gap and output gap with interest rate. In this paper, I examine the applicability of the Taylor's rule in China and find that Chinese central bank does not use the standard Taylor's rule but pursues the interest rate smoothly. Under the inflating target rule, the central bank adjust the monetary tools according to different between the real inflation rate and it's target. That is, it is important that there has considerable relation between tools and real economy. This paper studies how to use the tool combination into the financial deeply of developing countries.In chapter 4, I will discuss optimal monetary policy under regime switching. First, the path of resource dispose will influence the economic structure. Next, there is the path dependence effect under regime switching. In developing countries, finance restrain is a widespread phenomenon that means lower interest rate and lower exchange rate. This paper will provide a framework about how to conduct monetary policy under financial deepening.Chapter 5 investigates how to conduct monetary policy in an economy with near-zero nominal interest rates, that is named liquidity trap. Once economy is in liquidity trap, the central bank will be restrained to conduct interest rate for improving economy. This paper studies the cause of liquidity trap, and suggests how to escape from liquidity trap. Chapter 6 is about the neutral monetary policy. The premise of the neutral monetary policy is altruism other than egoism. The dynamic optimal monetary policy under this framework that pursues natural interest rate equal real interest rate will be conducted small and continue. Because our country has some shortcomings, so it is not suitable for adopting this framework.Dynamic optimal monetary policy is the latest research in recent years. The system research still lacks very much, and topic of that is numerous and abstruse. Limited by my level, it is hard to avoid for one thing cited. Mostly model in this paper is established on the achievements of the academic elder. Some models that set up independently, although probably not so mature, they reflect my view and my research method in recent years.