Study Of The Effectiveness Of Monetary Policy In China

With the changes of economic situations both home and abroad, such problems as insufficient demand and deflation have appeared gradually after China' s macro－economy achieved its aim of"soft landing" in 1996 .It is truly vital to make further researches in this subject especially when china suffered the deflation. Aggregate supply surpassed gross demand, what' s more, the price index dropped to a low level and the investment and consumer demand stagnated. In order to overcome the deflation, the central bank of China took the government' s macro－economy control which has been switched over to the expansion of domestic demand and the adjustment of supply structure from the restraint of aggregate demand inflation in the years 1993 to 1996. Correspondingly, China' s monetary policy has also been shifted from the control of inflation to the prevention of deflation. The thesis first briefly introduces the theories on the effectiveness of monetary policy. What follows are the analysis of the economic realities in China, the description of the contents of monetary policy and the evaluation of its effectiveness. On the basis of which the thesis points out the major restrictive factors influencing the effect of monetary policy. Then we began the analysis on the necessity and feasibility of perfecting monetary policy, as well as study experiences of other countries. The thesis in its last part probe into the monetary policy framework 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. At last, the thesis puts forward some means and measures to increase the effectiveness of monetary policy, which are as follow－speeding up interest rate marketability reform, enhancing open market operations, promoting the reform of state-owned commercial banks and enterprises, developing monetary markets, actively guiding the public expectations, seeking effective coordination of fiscal and monetary policy.