A Study On The Impact Of Interest Rate Regulation On Price And Output

Interest rate, as an important financial core variable and monetary policy tool, has long been the core of the macro economic analysis. Interest rates unexpectedly on how much and what direction the target variable and the reality of the economic effect, theorists long-term disagree. Analysis of the background and analysis object and analyzed by means of different lead to two major theoretical schools of tit for tat view: to Keynesian school representative of mainstream economics has always stressed that interest rate and real economic growth reverse changes in the relationship, and the financial deepening school that boost the economy long key is to improve the level of real interest rates. Whether it is the past "Fisher Effect" is now a popular view, relationship between no minal interest rate and inflation rate is uncertain. This paper is devoted to the research of the relationship between interest rate and the real economy, and the new ideas and conclusions are obtained.At first the model theoretical analysis on interest rate adjustment in economic output, prices, balance of payments and employment rate of four paths(i.e. asset prices, exchange rate, money supply and credit) and in the third sector under the condition of open economy respectively of interest rate effects of output and interest rates affect the price of the theoretical model is deduced, and two from the perspective of monetary supply and demand of Monetary Equilibrium and the imbalance of the effect of interest rate regulation analysis, finally puts forward the hypothesis.Then it uses the data from 158 countries to discuss the tendency of monetary policy in different countries and financial crises before and after the financial crisis. Finally, this paper analyzes the optimization measures of China’s monetary policy tools. The conclusion of this paper is more than the discovery of the law of economic operation, which provides theoretical basis and policy basis for the development of real economy:Overall economic growth trend and viscosity and developed countries or regions economic growth is stronger trend and viscosity; developing economies growth with greater volatility and instability.Spread mainly through the perspective of the impact of the financial needs of the bank credit to the economy negatively related to the impact. In 1998-2007, the negative correlation between interest rate and economic growth is more significant, and then the impact of the financial crisis on the impact of social output on the economic growth of the important variable is the loan interest rate, the current loaninterest rate increases 100 bp, the current economy will decline by about 0.35%, the loan interest rate has lagged behind. C hanges in deposit interest rates had little effect on the economy, indicating that the rate cut will help are experiencing a slowdown in the economy bottomed stabilize, but unable to pull the economy to accelerate recovery, the lag that deposit interest rate does not have lag characteristic.Three kinds of interest rate adjustment is more through the c hannel of the money supply to the developed countries or regions of the economy, the three rate cut by 1%, economic growth will increase by 0.1%-0.2%. Development of the country’s interest rate regulation and loan interest rates and control, and loan interest rate sensitivity stronger, interest rates down 100 bp, the current economic growth of about 0.4%, and the interest rate regulation can affect the economy through two channels, most of the developing countries are bank dominated financial system, the development of the banking sector has an important impact on indirect credit demand and money supply, due to the growth rate of the economy and the pace of economic growth, the overall economic leverage can promote economic growth in developing countries. 2 Effect of interest rate adjustment on price:Inflation trend, and maintain the characteristics of the continuous trend is getting weaker and weaker, this shows that in recent years, the factors affecting the price rise and fall more complex. The growth rate of general money M2 has a greater impact on the rate of inflation, which also proves that inflation is more a monetary phenomenon. Three types of interest rates have lagged behind the control of inflation. Cross term coefficient shows that the spread and M2 growth rate of the overall impact on inflation, spreads through domestic credit demand impact on the degree of inflation is getting smaller. Deposit interest rates mainly through the money supply channels to the impact of inflation, this conclusion is drawn through the central bank’s monetary policy to control inflation open policy operating space.Empirical results show that the credit demand model can better explain C hina’s economic growth, C hina’s benchmark interest rate regulation has at least a period of lagging behind the economy, and the estimated effect of interest rate control prices in the money supply model is more significant.