Monetary Policy Tools And Intermediary Target Selection: International Comparison And China's Empirical

After the global financial crisis of 2008,central banks continue to innovate monetary policy tools,use a variety of monetary policy instruments,as well as adjust the intermediate target to stimulate the real economy.A lot of new phenomena have sprung up during this period.Because of the economy falling into a liquidity trap,traditional monetary policy has no operating space.Central banks in developed countries have resorted to various unconventional monetary policies,therefore monetary policy has been given a particularly important position.The people's Bank of China learned from the experience and lessons of the central banks of developed countries,also carried out a series of innovation according to its own development needs.It can be seen that the choice of the monetary policy instruments and the intermediary target is always closely related to the macroeconomic operation,and adjust dynamically with the change of economic and financial situation.Monetary policy is constantly adjusted to adapt to the needs of the macroeconomic and financial development.This paper attempts to answer the following questions:First,what are the similarities and differences of the evolution of monetary policy tools and intermediate targets of the people's Bank of China compared with those of the developed countries'?Second,can those innovative applications of monetary policy tools and intermediate targets in the developed countries be used for reference in China?Third,how should China's monetary policy tools and intermediary targets be chosen?China's monetary policy is a part of the global monetary policy system,which is affected by both international and domestic economic and financial environment.China needs to learn from international experience,meanwhile China will also provide its own theoretical and practical contribution to the world.This paper studies the literature on the choice of monetary policy instruments and intermediate targets,on their mechanism of action and policy effects.The paper also studies the literature on the use of interest rate corridor mechanism,inflation targeting system,quantitative easing policy and negative interest rate policy.On the basis of the literature review,the third chapter of this paper compares the evolution of monetary policy instruments and intermediate targets between China and the United states.As United States has irreplaceable influence on the world economy,the evolution of American monetary policy is very representative,the study of it will provide reference for China.This paper argues that although the development process of the people's Bank of China and the Federal Reserve is not the same,there are many differences in the evolution of monetary policy tools and the selection of intermediate targets,but there still exist many common characteristics:First,monetary policy tools are always being innovated,the central bank's monetary policy toolbox is now very rich,monetary policy tools will also be given new features as the economic situation changes.Second,the selection of the intermediate target of monetary policy is not fixed,central banks do not rigidly adhere to the choice of quantity or price index.Central banks will make timely and appropriate adjustments according to the needs of economic development.Third,both domestic and international factors can influence the choice of the central bank's monetary policy.The fourth chapter makes an exposition of the representative innovation of use of monetary policy tools and intermediate targets.The improvement of interest rate corridor mechanism by the Central Bank of developed countries after the financial crisis,enable central banks provide market a large amount of liquidity without increasing the interest rate,which enhanced the flexibility of monetary policy regulation.The characteristics of the "constrained choice" of the inflation targeting system make the central bank more flexibility in the choice and application of the policy instruments and the intermediate targets.Quantitative easing policy add quantitative index in advance,which is to expand the use of open market operations.Quantitative easing policy regulate long-term interest rates instead of short-term interest rates.Negative interest rate policy force commercial banks to inject liquidity into the real economy by the way of excess reserve charges.Negative interest rate policy can also reduce long-term interest rates.All those innovation provides good idea for China,China should choose to learn from the experience of developed countries according to its own needs.The third and the fourth chapter make a good foundation for the choice of China's monetary policy tools and intermediary targets.The fifth chapter constructs the SVAR model,discusses the validity of the quantitative index in China's monetary policy.Research shows that M2 is no longer appropriate to be used as intermediate target of monetary policy,while the index of aggregate financing to the real economy can play an important role in the transmission mechanism of monetary policy.Therefore the index of aggregate financing can be used as intermediate target.The sixth chapter discusses the effectiveness of price index by constructing the VAR model.It is concluded that Repo and Shibor can play a part in the transmission mechanism of monetary policy.Repo and Shibor has become important indicators of monetary policy,they can be used as China's monetary policy intermediary target.Quantitative indicators and price indicators are not contradictory.It is necessary to cultivate the intermediary target of price type,so that the central bank can play the two functions of quantity and price.The seventh chapter discusses the mechanism of interest rate corridor,and constructs the GARCH model,TARCH model and EGARCH model to choose the benchmark interest rate of China's interest rate corridor mechanism.It is concluded that the interest rate corridor,especially the floor interest rate corridor mechanism,can make the decision of interest rate and liquidity supply do not interfere with each other,which increases the degree of freedom of the central bank's monetary policy regulation.Interest rate corridor mechanism and open market operations are not contradictory.When interest rates are fully liberalized,loan facility instrument to be used as upper limit of interest rate,deposit facilities to be used as lower limit of interest rate,the principle of open market operation and interest rate corridor is consistent.The precondition of the interest rate corridor mechanism is to have a clear market benchmark interest rate,empirical results show that Shibor overnight interest rates and Repo overnight interest rates can become the benchmark interest rate.The eighth chapter of this paper draws the main conclusions of the paper,and prospects the future of the research.