Under The Open Economy, The Effectiveness Of Monetary Policy Research

The effectiveness of monetary policy is an important issue of combination of both theory and practice. The arguments and researches of Chinese and western scholars on this issue have not ever been stopped. While the effectiveness of monetary policy in the open economy is a new and popular topic to Chinese government and scholars, which has close relation to the fact that China is moving towards openness progressively. With the continuous development of reform and opening to the outside world, especially after China's entering WTO, the degree of opening to the outside world will be deepened further. Meanwhile, some new variants have been brought to monetary policy. The new situation certainly demands that monetary policy be made corresponding adjustments.The theoretical and practical researches show that the effect of monetary policy in the open economy should be more obvious than that in the closed economy. But in the last years, the effect of China's monetary policy on stimulating economy and alleviating the pressure of deflation is not remarkable. Besides the domestic restrictive factors, the influence of open economic environment on monetary policy should not be ignored. From the analysis of China's certain economic and financial environment, the internal and external equilibrium conflict restricts the effectiveness of monetary policy. In the final analysis, the internal and external equilibrium conflict lies in the rigidity of the exchange rate system and the inconsistency of home and foreign currency policies. And the quickening of capital flow also urges us to make a new choice on policies.In the general trend of open economy, it is necessary to probe into the monetary policy framework again and make a new choice on the ultimate goals, intermediate targets, instruments and transmission mechanism of monetary policy, to bring the effect of monetary policy into full play. However, there are still some factors restricting our country's monetary policy. It requires us to suit the remedy to the case and make great efforts to heighten the effectiveness of monetary policy.