Research On The Quantitative Relationship Between Intermediate Targets Of Monetary Policy And Inflation

Intermediate targets of monetary policy are the connection points between monetary policy instruments and final targets, which are very important to policy control effect. While monetary policy is the significant means to control inflation, and the research on the quantitative relationship between intermediate targets of monetary policy and inflation can supply quantitative and scientific reference to monetary policy to control restrain inflation. But because of too many economic factors' disturbance, the quantitative relationship between intermediate targets of monetary policy and inflation becomes very complicate. Therefore many countries' central banks give great concentration to the research on the relationship. So, it has not only theoretic value but also practical value to study the quantitative relationship between intermediate targets of monetary policy and inflation.The quantitative relationship between inflation and intermediate targets of monetary policy is systemly analyzed from two sides in this paper, which is long-term and short-term relationship. On the base of correlative economic theory, the author analyses the dynamic impact of intermediate targets of monetary policy on inflation in short-time, then brings forward lag-cointegration, which can describe the long time relationship between different time variables. And studies the long-term quantitative relationship between intermediate targets of monetary policy and inflation. At last, the author establishes multi-dimensions time series and lag-cointegration blending model, and this model forecast CPI and gets good forecast effect.(1) Economic theory about intermediate targets of monetary policy and inflation are studied, which is the base of the quantitative relationship analyses.(2) Using econometric models and month data got from the People's Bank of China, the author analyses the dynamic impact of intermediate targets of monetary policy on inflation in short-time, mainly using Granger Causality Test, Impulse Response Function and Variance Decomposition, and get every impact magnitude and direction of intermediate targets on CPI at different time.(3)On the base of cointegration theory, the author puts forward lag-conintegration and its estimates and tests based on least square method and maximum likelihood estimation, and using the Lag-cointegration, the author researches the long-term quantitative relationship between intermediate targets of monetary policy and inflation, and finds the lag-cointegration equation which can describe long-term relationbetween those variables.(4) Having synthetizdng time series analyse, lag analyse and lag-conintegration, the author establishes multi-dimensions time series and lag-cointegration blending model, then using this model forecast CPI and gets good forecast effect.