Research On The Performance Of China's Monetary Policy

In this thesis, based on the view of social welfare, the "monetary policy efficiency" is defined as the achieved efficiency in the promotion of social welfare (the reduction of social welfare loss) etc. through a series of monetary policy operation or self-reform (the optimization of the specific content of the monetary policy framework) by monetary authorities. Through the process of theoretical modeling and optimization solution, the expression of optimal policy reaction function and the function expression of the rate of inflation and output gap under optimal monetary operations could be got. The monetary policy operations, which have reached the social welfare maximum, were defined as the optimal monetary policy operations. And on this basis, in this thesis two measurments are provided in order to measure the monetary policy efficiency of our country. One is based on the optimal monetary policy reaction function, and the other one is based on the social welfare loss function.Between them, in the investigation of monetary policy efficiency based on optimal monetary policy reaction function, actual monetary policy operations’s deviation value and the range from the optimal monetary policy operations are set as the measurement of monetary policy efficiency. In the investigation of monetary policy efficiency based on social welfare loss function, loss of social welfare’s (which actual monetary policy operations have causes) the deviation extent from loss of optimal social welfare are set as the measurement of monetary policy efficiency.On the basis of baseline model, in this thesis, the optimal choice issues of monetary policy are to be further discussed. According to our research, the optimal monetary policy instrument is connected with the shocks on economies mainly from commodity demand or money demand, money demand mainly from the commodity markets or money markets, and relatively elastic coefficient of aggregate demand to nominal interest rates, nothing to do with the inflation aversion coefficient of social welfare function, and the various dimensions of commodity market supply variables (Including the supply shocks of commodity market, the slope of the aggregate supply, etc.). Quantitative instruments could be superior in maintaining social welfare when the economy is exposed to shocks mainly from commodity demand, money demand mainly from commodity markets and the effects of interest rate policy on aggregate demand is weak; on the contrary, interest rate policy instrument should be employed.Considering the relationship of the same period and the lag between variables of the macroeconomic dynamic system after amending the baseline model, the S-VAR model is employed to estimate the parameters. The empirical results show that, in recent years, the efficiency of actual monetary policy operations in terms of enhancing the social welfare loss of our country is progressive and the actual monetary policy operation tend to an optimal monetary policy operation, which can maximize the social welfare.In the empirical analysis of optimal choice of monetary policy tools of our country, it is found that the results of empirical research are consistent with our theoretical deduction. In most of the sample interval time, the impact of demand from money market is much larger than that from the commodity demand, and in the promotion of social welfare the interest rate policy is more dominant than Quantitative instruments.