An Inquiry Into The Economic Liberalization And The Effectiveness Of China's Monetary Policy

Since the beginning of reform and opening up, China's economic opening has been greatly improved, both in the breadth and depth of the outside world, the level of China's opening spade a strong upward trend. This change will make the monetary authorities in the formulation and implementation of monetary policy to achieve a conflict between balanced internal and external balance, add to the government's macro-economic control and smooth operation more difficult. Especially after joining the WTO, economic globalization has never been higher, and external economic shocks to China's economic development has brought unprecedented challenges. Keep a balanced monetary policy has been the impact of external factors outside more and more difficult for the central bank to accurately grasp the changes, decreased the effectiveness of monetary policy. Therefore, the effectiveness of monetary policy in an open economy has now become a major study of monetary policy theory and practical problems. This also contributed to the topics of this paper.In this paper, the history and logic, the partial equilibrium analysis and general equilibrium analysis, standardized analysis and empirical research method to inspect the substantive relationship between the economic opening and the effectiveness of monetary policy. In this paper, the total demand-supply framework of the model of economic opening and for the relationship between the effectiveness of China's monetary policy theory model and Test model analysis. Compared with previous studies, this paper analyzes the theoretical model with the following features: One, the Mundell-Fleming model, the introduction of economic liberalization, construction of the open economy under the conditions of total demand-supply model and mathematical logic to prove through rigorous analysis of decreasing effectiveness of the relationship between the economic opening and monetary policy. Second, monetary policy effect will be extended to the effect of the interest rate. Decomposition the monetary policy effect on output effects, interest rates effect and the price effect, and the degree of liberalization of the economy in order to better reveal the mechanism of effect on the effectiveness of monetary policy. The empirical measurement model analysis, because of interest rates data limitations, we used the traditional sense of the effect on output and price effects of monetary policy to empirical testing. Meanwhile, test analysis has also drawn on the Karras and Fan conglai such as the introduction of the open method to measurement model economic effects of China's monetary policy for further analysis. This paper not only from the perspective of macro-level to estimate and regression analysis the measurement mode of the relationship between economic opening and the effectiveness of China's monetary policy, also extend the vision of a more empirical testing microscopic description of the factors do some analysis. The model is actually a continuation and useful supplementary measures, with a view to testing the theoretical model and measurement model and the interpretation of the conclusions to prove more effective.Finally, to improve the effectiveness of monetary policy, many measures have been taken. For example, the floating exchange rate relaxation, improve the RMB exchange rate formation mechanism; concerned about the balance of international payments, increase foreign exchange reserves to resolve; promote market-oriented interest rate reform and improve efficiency in the conduction of the monetary policy; and international monetary policy coordination, and to achieve balanced development between internal and external economy.