Analysis On The Effectiveness Of Monetary Policy In China

Before 1984, our country has not yet established the central bank system, there is no real sense of the monetary policy. Our macro-control mainly depends on planning tools, monetary policy is subject to the requirements of the planned economic system. When Industrial and Commercial Bank of China was divided from People's Bank of China in 1984 , the People's Bank of China start to fulfill specialized functions of the central bank, monetary policy in the modern sense began to carry out in our country. It is just more than 20 years that China's central bank formulate and fulfill the monetary policy. During this time, the People's Bank of China adjust money supply through some monetary policy tools so as to stabilize the currency, eliminate the inflation or deflation to promote economic growth. However, formulation and implementation of the monetary policy has good effect at a certain period of time and poor performance at a certain period of time. This makes people have to consider the effectiveness of monetary policy. And the analysis of this issue not only make us have an objective and rational knowledge of the practice of monetary policy, but also have important reference and reference significance for further playing the role of monetary policy in the future.Now, China's economy is in a very complex situation. In 2007, for the much more mobility of banking system and the Larger price increases, monetary policy of People's Bank of China gradually changed from "stable" to "tight". While at the beginning of 2008, People's Bank of China still implemented the tight monetary policy, but after September, due to the rapid deterioration of the international financial crisis, whose impact on China's economy obviously increased, People's Bank of China began to implement moderately relaxed monetary policy. As the Ups and downs of monetary policy like this, we implement two totally different types of monetary policy during a short period of time. when the effect of the former monetary policy is beginning to appear, we begin to implement the monetary policy in the opposite, then is the mobility of monetary more or less in the reality, and is the goal of monetary policy to maintain the stability of the currency or mainly to promote economic growth? What is the future impact on the economic for the implementation of both opposite monetary policy during a short time? After the implementation of tight monetary policy, are we going to implement stable monetary policy as a buffer zone, then to re-implement the appropriate relaxed monetary policy, Which the scholars previously have not encountered and studied.This thesis demonstrates the theoretical basis of the monetary policy's effectiveness from different theories of monetary policy in Western Economics. The thesis first briefly introduces the theories on the effectiveness of monetary policy and the measure of the effectiveness of monetary policy. Then this paper analyze the influence of the effectiveness of ultimate goal, intermediate goal and operation objectives, policy tools of monetary policy at this stage. And then it points out that as China's economic develops, Intermediate goals, operation objectives, policy tools of monetary policy should be modified to adjust it. And then the thesis analyses the faced problems when our country's monetary policy transmission channels changed from a simple mass-oriented credit channel to credit, interest rates and asset prices various channels in the process. What follows are the analysis of the economic realities in China between 2005 and 2008, the description of the contents of monetary policy and the evaluation of its effectiveness. Finally the paper analyze empirically the effectiveness of monetary policy in our country with econometric models in recent ten years and make a suggestion on how to improve the effectiveness of monetary policy.