Study Of The Choice Of Intermediate Target Of Monetary Police In China

The intermediate target of monetary policy is a financial target which a National Central Bank establishes to carry out the final target of the monetary policy and can be prognosticated and controlled directly. Generally speaking, the National Central Bank usually can't carry out the end target of monetary policy directly while carrying out monetary policy. It can carry out the end target of monetary policy indirectly by controlling those intermediate targets which have close contact with end target. If the National Central Bank wants to carry out the end target of monetary policy, it has to control the data information of end target firstly, in order to change and manipulate monetary policy tools when it is needful. As a result, study of the choice of intermediate target is valuable.This paper studies the history of intermediate targets of monetary policy of main western developed countries,new and developing countries and China, and summarizes its developing law, from which China could gain a deal of enlightenment. Next, this paper analyzes the validity of money supply and interest rate acting as intermediate targets separately, including the analysis of the controllability and the correlation of them and GDP,CPI. This paper uses the methods of co-integration test and Granger causality test to analyze the correlation of the intermediate targets. Then this paper makes a conclusion that money supply still has some effectiveness,but the applicability of money supply is declining, and money supply will be not suitable to be intermediate target in the future. Another conclusion is interest rate has its adaptability, but before the accomplishment of interest rate liberalization and a developed financial market, interest rate can't be intermediate target of monetary policy. At last the paper puts foward some proposals. Central bank should improve the efficacy of money supply by adjusting the layers of money supply and ameliorating the institution environment. Interest rate liberalization and development of financial market should be implemented simultaneously, so interest rate can enter into intermediate target when interest rate is competent for intermediate target.There are seven chapters in this paper. The first part is introduction; the second part is the theories of intermediate target and co-integration; the third part is the development of intermediate target of China and foreign countries, and the enlightenment we can receive; the fourth part is the analysis of validity of money supply acting as intermediate target; the fifth part is the analysis of validity of interest rate acting as intermediate targets; the sixth part is some proposals; the seventh part is conclusion of the paper.