The Empirical Test Of The Taylor-type Rules In China

China's monetary policy has experienced changes from direct control to indirect control since 20th century 90's. The ultimate goal of monetary policy is "making the value of money stable and promoting the economy growth". The intermediate and operational goal of monetary policy has shifted from the scale of lending to the money supply and base money. Some scholars believe that the achievement of China's monetary policy on the intermediate goal of money supply is better, but on the ultimate goal of price stability is not significant. Therefore, the problem that whether the money supply is still a useful intermediary goal or there is a better policy instrument, has become the current hot topic.With the trend of marketization of our economy, the adjustment function of monetary policy to macroeconomic is more and more prominent. At the same time, many domestic scholars argue about how to regulate the economy through the monetary policy, discretion or policy rule and what kind of the rule the central bank use. This dissertation started from the study of Taylor-type rules, then applied them to test our country's monetary policy, and got the conclusion.Based on the quarterly data from 1992 to 2007, this dissertation examines the applicability of Taylor Rule, forward-looking rule, forward-looking and interest-rate-smoothing mixed rule, and interest-rate-smoothing rule which is used less before. The results suggest that the Taylor Rule can't describe China's interest rate movement; Forward-looking and interest-rate-smoothing mixed rule can describe China's interest rate movement, however, this model is not suitable as an instrument of China's monetary policy rules. One hand, the coefficient of interest rate smoothing is too large, and weakened the explanation of the inflation and output gap on interest rates changes. The other hand, with the comparison of the forward-looking rule, we found that the improvement of the goodness of fit is not due to the expected inflation; The interest-rate-smoothing rule can provide a reference to measure the tightness of monetary policy; The central bank smoothes the interest rate strongly, which illustrates the stabilization of interest rate is also one of the policy targets; We have got the similar conclusions with many domestic scholars, that our monetary policy is an unstable monetary policy rules. In this situation, there is a self-fulfilling mechanism about the emergence and development of the inflation or deflation.The results of the regression show that monetary policy in our country must be systematic. Interest-rate-smoothing rule can be used as the instrument of the monetary policy rules and the model can establish a specific and observable target to the monetary policy, enhance the accountability and transparency, form stable market expectation, and finally improve the efficiency of the monetary policy stabilizing economy.