Research On The Coordination Between Monetary Policy And Macro Prudential Policy

At present,China's economy is now in “the superimposed three periods” of “growth shifting period,period of structural adjustment,and pre-stimulus policy digestion period” simultaneously.How to realize the smooth transition from the superimposed three periods concerns the future development of China's economy.With the rapid expansion of the financial system,accelerated financial innovation and diversification of financing channels,the financial system risks and instability continue to accumulate and gradually become prominent.Local government financing platforms,real estate markets,and shadow banking systems may become the blasting fuse of systemic risks.The fifth Central Financial Work Conference and the report on the Nineteenth Congress all stressed that “a sound financial supervision system should be established,and the bottom line of systemic financial risks should be holded”.Preventing systemic risks has become a core issue in governing the country.Every crisis originates in the hidden danger buried in the period of expansion.In the period of economic prosperity,the liquidity supply is sufficient,the economic subject is overleveraged,the structure of liquidity is unbalanced,and the risk accumulation is accelerated.When liquidity is tightening or a financial institution has shown a crisis,the accumulated risks are gradually revealing,systematic risks are rapidly forming and spreading,and the previous seemingly prosperous and robust financial systems collapse instantly.Facts pr oved that the original policy framework is weak in preventing systemic risk and realizing "price stability + economic growth" and financial stability only through monetary policy has shown low feasibility,thus the macro-prudential policy is introduced.Monetary policy is based on the overall operation of the macro economy and regulates the economy with the total amount,but it has obviously deficiencies in adjusting the ecomomy structure.The counter-cyclical mechanism of macro-prudential policy not only can smooth the supply of liquidity in the time dimension,but also can suppress excessive concentration of liquidity in the spatial dimension.Because monetary policy and macro-prudential policy have inconsistent objectives and superimposed transmission mechanisms and channels,the two do not satisfy the Ding Bergen law.Therefore,in practice,it is necessary to harmonize the inconsistency between the two.This dissertation attempts to combine China's reality and answer three questions: "Why monetary policy and macro-prudential policy should be coordinated,how to design policy rules for monetary policy and macro-prudential coordination,and How is the policy effect of monetary policy and macro-prudential coordination?"Historical experience shows that the loose monetary policy is often the prelude to the crisis.If funds are allocated on demand,there will be no structural imbalance.To answer why monetary policy and macro-prudential policies should be coordinated,we must first clarify the role of monetar y policy regulation in the formation of systemic risks and that how monetary policy promotes asset bubbles,industry risks,and regional risks.This dissertation summarizes the structural imbalances in the allocation of funds as "disintegration," "differential order," and "circle-layer effects," uses macroeconomic data from 2005 to 2017 as a sample to verify the existence of three kinds of effects,and provides realistic basis for formulating macro-prudential policies.China's financial risks are both macroscopic and microscopic.To solve the the financing problems of the small and medium-sized enterprises and the agriculturerelated enterprises that have made outstanding contributions to solving employment problems,over-emphasizing guarantees and ignoring potential risks have resulted that "two high and one surplus" industries and zombie enterprises continue to obtain loans.This further accelerates the accumulation of risks.In the allocation of credit resources and interest rate pricing,the market mechanism is not fully followed.In particular,the market power of commercial banks and the soft budget constraints of the local financing platforms and state-owned enterprises have blocked interest rate transmission channels,causing credit resources continuin g concentrated in a few areas,industries and corporations.Therefore,this dissertation cuts through the micro-level of interest rate transmission and analyzes the causes of systemic risk at the micro level.Based on the micro operational data of banks in China's listed industries,the market power of the sample banks was measured,and the blocking effect of market forces and budget soft constraints on the transmission of interest rates was verified by packet estimationAfter analyzing the effects of money supply regulation and interest rate adjustment on systemic risks,this dissertation further explores the rules for the coordination management of monetary policies and macro-prudential policies.This dissertation holds that,like the McCallum rule under t he quantitative monetary policy and the Taylor rule under the price-based monetary policy,the coordination management of monetary policy and macro-prudential policy also needs to follow the policy rules.Therefore,in light of the reality of China's monet ary policy transition,broad credit/GDP is used as a monitoring indicator of financial stability,this dissertation embedded it in a mixed monetary policy rule,and used a state space model to estimate parameters.Further,a stochastic simulation model was constructed combining the IS curve and the Phillips curve to assess the policy effects of coordination management of monetary policy and macro-prudential policies.Finally,the dissertation summarizes the financial reform practices of various countries after the international financial crisis and suggests on the coordination management of monetary policies and macro-prudential policies combining with China's economic and financial situation and the progress of financial reforms.