Study Of The Effects Of Monetary Policy In The Context Of China's Deflation

The main schools of western economics have stated that the monetary policy is ineffective. Through the analysis of these theories and its applicability on the basis of the current economic performance in China, the paper indicates that the monetary policy is still effective under the background of deflation in our country. After the rough description of the inefficiency of monetary policy in China during recent years, the author analyzes the deep reasons why the monetary policy of China is inefficient from both internal and external links of monetary policy transmission. Based on all the analysis above , the author points out that the internal causes of the inefficiency of monetary policy lie in the wrong judgement to the economic and financial situation and in the tardiness of the monetary policy operation of central bank, the external causes lie in the basic restriction of the unstable anticipation of the public. Finally, the author mainly elaborates the policy countermeasures inside financial system, and come to a conclusion that relevant measures should be taken simultaneously in order to thoroughly solve the problem of the inefficiency of monetary policy.