Giving Priority To Employment Structure Effect Of Monetary Policy

The structural effect of Employment-prior Monetary Policy means that an employment maximized effect through supporting of the adjustment and optimization of economic structure by monetary policy. Unlike the usual conception that the monetary policy promotes economic growth and hence employment, it pays much attention to the establishment of standard in judging whether the economic structure is rational by shedding light on providing more employment opportunities, and to the supporting of employment by monetary policy in industries and enterprises with high employment elasticity in shaping an economic structure beneficial to the enlargement of employment, under which the economic growth is accompanied by high employment. Based on this consideration, the dissertation sets out from the sorting of contemporary researches on the relationships between monetary policy and economic structure, economic structure and employment, monetary policy and employment, etc. respectively. Then the paper discusses the significance of strengthening the structural effect of monetary policy and related theoretical basis and realistic reason of enforcing this employment-prior monetary policy in China. The dissertation also talks about the mutual dependent relationship between the structural effect and employment effect of monetary policy.The proposition concerning the monetary policy's structural effect with employment preference has been proposed through the understanding of a series of theories on economic structure and labor theories specialized on employment. So, the dissertation makes a survey of Marxian's theory of labor and employment under capital constitution, Lewis's theory of labor and employment under dual economic structure, Classical School's theory of labor market auto-clearance, Keynesian monetary theory based on money exogeneity and employment theory based on effective demand analysis, Neo-Classical Synthesis's theory of structural unemployment during industry adjustment, Monetarism's theory of natural unemployment rate and New Keynesian's sticky wage theory with much attention on the functional deficiencies of labor market. All these theories can help us to understand the relationship between economic aggregation, economic structure and labor employment, hence the reasons for unemployment from various angles of capital constitution, structural arrangement of economy, labor market supply and demand, effective demand, industry adjustment and stick wage, which can be served as theoretical basis and methodological instruction for using monetary policy in resolving the problems of economic structure and unemployment.The core part of monetary policy is to manage and control money supply. Centering around this core, the function of monetary policy has being reinforced in continuous search and practice and hence constituting a unique frame with operational rule. Due to the diversification and complication of modem economic life, hence the mushrooming of new contradictions and problems emerged in economic development, the conduct of monetary policy, as the most important macro-economic management tool in modern economy, has become more and more scientific and systematic. In developed market economies, the monetary policy is not only a simple manipulative process of money supply by central banks, but an all-round policy operational system. The dissertation then interprets every part of this system, i.e. the objective, tool, transmission mechanism, intermediate objective and operational rule, from which the whole operational process from early objective determination to final effective realization of the policy can be discerned. And this can be treated as an analytical basis for the upcoming sector discussing the using of monetary policy in optimization structure and promoting employment.To strengthen the effect of adjusting economic structure of monetary policy and to strengthen its effect in promoting employment are the two aspects from the requirement of the same monetary policy. The establishment of objective, the enforcement of tools, the construction of transmission mechanism and the making of manipulation rule of monetary policy should all reflect considerations to be beneficial to the optimizing of economic structure and improving of employment. In other words, it is required that in all sectors of the monetary policy system operation the explicit above-mentioned requirements should be proposed in order to establish a monetary policy system that can effectively adjust economic structure and promote employment. Aiming at this, the dissertation analyzes several important sectors of China's monetary policy operational system in the last chapter, and points out its defects in hindering the structural optimization and employment increasing, together with some related counter measures and suggestions. These analyses and policy suggestions are the key part and important innovation of the paper.As to the monetary policy objective, the dissertation finds that the traditional relationship between price level and employment embodied in Philips Curve is not supported by China's data, hence the unemployment rate and inflation rate seems to move in the same way. So, to sacrifice price stability for employment through high money supply is not feasible. The characteristics of China's unemployment belongs to structural unemployment and the reasons fall into four main categories: 1) serious conflicts between supply and demand in labor market; 2) the "Crowing out" effect on employment brought by capital and technological elevation in economic growth; 3) the unfavorable industrial structure to absorb employment; 4) the mobility restriction of mass labor force brought system reform of city and rural area. All the reasons indicate that only through the settlement of structural contradiction in economic operating but not adjusting in aggregate level can the problem of unemployment be solved. And the objective of monetary policy should not be set swaying between economic growth and price stability, while consideration be attached to economic structure optimize and hence the objective set on employment enlargement.As far as the monetary policy tools are concerned, the dissertation mainly asserts that PBC has being more and more skillful in using aggregate-level adjustment tools both on degree and flexibility, while much inexperienced in using structural adjustment tool which can be reflected by the single usage, small-scope and low-degree adjustment. So, the monetary authority should not only shift and strengthen the current monetary policy tools' influence toward employment enlargement but also find more innovative tools to adjust structure.As for the transmission mechanism of monetary policy, the dissertation thinks that credit rationing still exists and will play a positive role among the measures to optimize economic structure if taking into account the reinforcement of monetary policy's structural effect from current market condition and the situation of economic and financial system. In the process of strengthening the employment effect of monetary policy, the problem of how to design credit policy and allocate credit to industries and enterprises with relatively large employment should be solved. And the credit restriction and discrimination towards these lines and firms from banking sector should be eliminated, the credit transmission mechanism of employment-prior monetary policy should be unclogged.On manipulative rule of monetary policy, the dissertation holds that there exist randomness, passiveness and lagging in the operation of China's monetary policy. So the guiding principle and manipulative mode of the policy should shift from the former single discretional following aggregate requirements to rule-based operation. The dissertation then proposes a innovative route concerning manipulative rules with detail, i.e. operates according to "Employment Elasticity Rule", which means the central bank adjust its base money according to the variation of financial institutions' average assets weighted by employment elasticity. Based on this rule, when supplying the money base, the central bank should arrange the banks in a descending turn according to their credit assets' elasticity to employment, and the bank whose loan assets are high employment-elastic can get the fiat money first. In the light of this new rule, the dissertation explores to gauge the employment elasticity of main lines in secondary industry, and points out the key supporting objects of monetary policy in the industry with the sequence of employment promoting first.The tenet of this paper is to advocate a kind of thought in monetary policy with the core of promoting employment, to explore a path for monetary policy to enlarge employment by optimizing economic structure and to construct a operational system for monetary policy with an eye on economic structure optimization and employment enlargement.