Intermediate Target Of Monetary Policy After The Financial Crisis

Since the middle of the 20th century,The debate on the intermediate target of the monetary policy has no end.Different schools of thought adhere to the different intermediate targets,including the Keynesian and Monetarism schools. And the western countries also continue to convert the intermediate target of the monetary policy with the historical development of the nation .Since the 90 years of the 20th century, most western countries give up the money supply as the intermediate target of monetary policy, turned into a stare-inflationary monetary policy. With the rapid development of the new economy and the revelution of the information technology ,the virtual economy develop and expand with a high speed.Then the finanical crisis attacked every country of the world.It raises the concern of almost all economists and reflecting the appropriate of the current choice of intermediate target of monetary policy .And now the debate of the intermediate target of the monetary policy began warming.With the rapid development of globalization, China as the world's largest developing country and a large open ecnomy in the world can't separate from the global economy. The monetary policy should always be concerned not only about its own economic development, but also pay attention to changes of the international economic. The global financial crisis has also affected China. Facing the risk of economic falling, chinese government carry out the loose monetary policy and active fiscal policy to stimulate domestic demand and ensure the steady growth of the economy . According to the loose monetary policy ,the excess liquidity led directly to the beginning of the inflation in the mainland of china in 2009. In view of this, our intermediate target of monetary policy is still based money supply should be debating again. While the scientific community has not a single conclusion, the choice of intermediate target of monetary policy are essential for the future of the China ecnomic's development.This paper describes the Keynesian, Monetarist School and other schools on the theory of intermediate target of monetary policy and its support for the intermediate target of monetary policy choices first. Then I making the general description of the Western world since the 20th century 50 to 60 years about the conversion of the selection history of intermediate target of monetary policy, the conversion process in the different economic backgrounds and the ultimate goal of monetary policy. Frequently in financial innovation and the rapid development of virtual economy today, the intermediate target of monetary policy must be reflected on the difficulties choice. Then this difficulties intermediate target of monetary policy on the choice of conversion as well as in the new economy and global integration process of the choice of intermediate target of monetary policy were described.The next part in the review of the econometrics theory, using the first quarter of 2000 to fourth quarter 2010 data (the money supply, interest rates, GDP, consumer price index) in the collation and study, making the linear correlation analysis and construct vector autoregressive model.with the money supply and interest rates as an intermediate target and the gross national product, consumer price index as the ultimate goal of monetary policy ,I made an empirical analysis of the relationship.Finally, the conclusions of the research is:although the relationship of the money supply as the intermediate target of monetary decline in the current development situation, particularly after the financial crisis. Due to the development of China's interest rate market is not perfect and the interest rate on the ultimate goal of the impact of monetary policy remains limited ,the exchange rate reform is still not complete, so the exchange rate as an intermediate indicator of operational role for our country is impossible. The intermediate target of monetary policy should still be using the money supply for a long period of time. Based on the above empirical and theoretical research results of the intermediate target of monetary policy, choosing an number of targeted recommendations: continuing to adhere to the money supply as the intermediate target of monetary policy, while strengthening exchange rate and interest rate of the market.