The Study On The Validity Of Chinese Monetary Policy

Monetary policy has a direct impact on a country's economy that if it can runssteadily. The monetary policy will play more and more important role on themacroeconomic stability in today's increasingly globalization economy. As China'seconomic structure and other reasons, there are many problems with monetary policy.For the reason, based on confirming the effect of monetary policy in the short term, thepaper conducted a study on the implementation of Chinese monetary policy and how toenhance the validity of monetary policy.First, the paper introduces the theories about the influencing monetary policyvalidity and makes it clear that how these theories play roles in monetary policyfunction process and mechanism. Secondly, according to theories, the paper makesnormative analysis and empirical analysis, and point out the main problems of themonetary policy implementation, including that it lacks instrument of monetary policytransmission mechanism and the monetary policy, and the monetary policy is notsufficiently independent, greater impact by financial policy and so on. Because of theabove reasons, the paper gets the conclusion that in our country the validity of themonetary policy is very small. With economical degree open deeply, exchange ratepolicy implementation is not perfect, and the objectives of monetary policy objectivesexchange rate policy, for that it weaken the effectiveness of monetary validity. Andthen the paper analyzes the inadequacy of China's exchange rate policy. Finally, basedon the analysis of the results and in light of China's actual situation, the paper gives therecommendations that we have to enrich and improve the monetary policy transmissionand channels and makes the central bank's policy intentions can be read through theimplementation of policy instruments to achieve the micro-economic level to improvethe conduction channels control of the real economy, meanwhile adjust the exchangerate and monetary policies to maintain the same goal in order to achieve the purpose ofenhancing the validity of China's monetary policy.