Relevance Study Of Residents' Consumption Savings And China's Monetary Policy

Since China's reform and opening up policy, residents'income improves year after year. With the steady growth of income level, household savings increase rapidly. According to the materials published by the International Monetary Fund, China's national saving rate has been the highest in the world since the 1980s, which accounts more than 70% of GDP. Although the consumption level also steadily improved, the consumption rate has been partial low. For instance, the consumption level of Chinese residents was 0.38 in 2006, which is far below the developed countries and even lower than the other three countries of"BRIC". As we all know that the consumption forms the final demand and household savings is a major source of capital investment. Therefore, it is necessary to study in depth on the saving and consumption in order to solve the problems on monetary policy. Especially in the situation that China's foreign trade surplus the current reserves, it is meaningful to study the monetary policy. This is why this paper studies the relevance of residents'consumption savings and monetary policy.During the study process, this paper makes a theoretical analysis on the relevance of residents'consumption savings and monetary policy first; this paper analyzes the reason of high saving level and consumption structure. Then this paper makes a positive analysis based on the data of consumption and savings. In the positive analysis, this paper analyzes the sensitivity of residents'consumption and savings to the monetary policy change. It is proved that the consumption and interest rate changes into reverse, while the savings rate is negative correlation with interest rate. This shows that by lower interest rates on certain extent the consumption and domestic demand can be stimulated; while it is useless to lower the saving rate. After that, with the use of the VAR model of C.A.Sims, this paper discusses the relation between residents'consumption and savings with monetary policy; the steady existence relation is found between the residents'consumption savings and monetary policy. The pulse analysis is used with the result that in the early period the change of monetary policy makes positive pulse to the residents'consumption and the change of monetary policy makes no respond to the residents'savings. Based on the analysis above, this paper makes suggestions on how to improve monetary policy effectiveness.