Study On The Macroeconomic Effects Of Real Interest Rate Change

Since 1980, interest rate has been changed for 23 times to adjust China's macroeconomic. Frequently of using interest rate policy shows that interest rate has already occupied a very important position in macroeconomic policies. However, it is the real interest rate which has a real impact on the economy. So studying on macroeconomic effects of real interest rate would help us to be more clearly knowing the results of the interest rate policy and understanding the reasons for changes in the economy. Furthermore, in our country, interest rate is not fully market-oriented, the study is also helpful for authorities to change the interest rate more timely and accurately.Based on the theories and practice of China and foreign countries, used the combination of qualitative and quantitative analysis, through analyzed the effects of real interest rates which impacted on the three main actions and the four macroeconomic objectives, we get the result that in different stages, different rates have different impacts on economic behaviors and objectives. At the last part, this paper summarized the whole conclusion and analyzed the reason which caused real interest rate policy to be ineffective on the economy. The reason not only included China's financial markets and interest rate system, but also related with interest rate sensitivity of different economic actions. Finally, according to China's financial market, this paper gave suggestions of reforming and developing the system of interest rate which can ensure interest rate policy to be more effective on our economy.