The Analysis Of Monetary Policy Rules In China

Since 1990s, the monetary policy rule theories and their empirical researches have been greatly developed. Monetary policy theories have been widely recognized, an increasing number of country's monetary policy theories and practices have emerged a trend of applying monetary policy rules. Along with the deepening of economic reform and the raising awareness on monetary policy, monetary policy is becoming increasingly important on macroeconomic regulation. On such a background, it is very necessary to refer to foreign monetary policy operation experiences and find monetary policy rules suitable for China's market economy system. The purpose of this article is to study the monetary policy rule of china Through theoretical research, empirical analysis and the application of quarter data from 1994 to 2008 of monetary policy practice, this article conduct an empirical test for China's monetary policy operations on the use of McCallum rules and the Taylor rules.In the theoretical research part, this paper describes McCallum rule and Taylor rule and take a review of China's monetary policy operation practices; Then this paper theoretically discuss the applicability of McCallum rules and the Taylor rule in China's monetary policy operation. In the empirical research part, we conduct an empirical test for China's monetary policy operations on the use of McCallum rules and the Taylor rules, Empirical results show that McCallum rule is not applicable but Taylor Rules is applicable for monetary policy in China. Furthermore, we also point out the limitations of the Taylor Rules. Finally, in the base of empirical researches above, this paper put forward to some proposes of transformation to Taylor Rules for China's monetary policy.