An Empirical Research On The Choice Of China's Monetary Policy Intermediary Goals

The choice of monetary policy intermediary goals is an important step of conduction mechanism of monetary policy. With the steady and continuous development of China's economy, its financial structure is in the process of optimization and progress, and marketization of our social economy gradually levels up. Changes in finance and economic fields have great impact to the tradition conduction mechanism in monetary policy of our center bank, the validity of the original monetary policy intermediary goal will change. So reappraising and choosing a suitable monetary policy intermediary goal have become the key point of clearing monetary policy transmission channel and leveling up the total validity under the present condition.The paper firstly generalizes the choosing theory of intermediary goal and the developing of intermediary goal all over the world, and then makes a theoretical analysis of adaptability on the money supply and rate as monetary policy intermediary goals. After that, the paper focuses on the correlation analysis to study the adaptability of monetary policy intermediary goal. making empirical analysis by constructing the Vector Auto-Regression Model of the season date from 1998 to 2009, and using the techniques of impulse response and variance decomposition. As a result:compare to rate, relation between money supply and macro economy is closer. Besides, the paper makes a prospect to the inflation target theory which breaks the tradition quarrel about money supply and rate which is better.At the end of this paper, some conclusions are reached:Rate as intermediary goal in our country at present is not proper, so we cannot change money supply to rate as intermediary goal, and we also cannot execute inflation target to replace money supply because we are short of the fundamental condition. According to the research, we think we must still choose the money supply as intermediary goal, and meanwhile, take some measures to improve its effectiveness. In addition to, we should actively carry out the process of interest rate liberalization, so as to make prepare for turning to rate as intermediary goal or executing inflation target as a new monetary policy in the future.