Research Of Monetary Policy Based On Nations' Consuming And Saving Behavior-from Micro Perspective

After over thirty years of reform and opening up, China's economy has had a rapid increase, and there is a significant change among national consuming and saving behaviors. The index of the consumption is showing a continuous decline since 21st century, and the final consumption rate has been reduced from 62.3% in 2000 to 35.26% in 2009, which reached the lowest level in history. The consumption demand's contribution rate for GDP reduced from 65.1% in 2000 to 45.4% in 2009, which also means the pulling impact from consumption demand on GDP reduced 1.4 %( from 5.5% in 2000 to 4.1%2009). From 1990s till now, China's saving rate has maintained at a high level– around 38% to 40%, however at the same time, even though saving rates are high as well, Japanese and Korean saving rates have been around 31% to 32%. In order to expand domestic demand after facing the global finance crisis, central government adopted a more effective and market-oriented monetary policy as a regulatory measurement tool. However, frequent use of various monetary policies did not help the situation, China consumption rate was still declining. Because residential consuming and saving behaviors is the most important micro groundwork for the effectiveness of monetary policies, this paper has chosen a perspective based on residential consuming and saving behaviors to discuss inner mechanism of the effectiveness of monetary policies, which is of great theoretical and practical significances.This paper aims to combine theoretical analysis and empirical studies together. Firstly the paper starts with reviewing the theories about residential consuming and saving behavior, which has laid the foundation for further theoretical analysis. Secondly, effectiveness of monetary policies on residential consuming and saving behaviors has been analyzed from a practical view. Lastly, living examples have been used to test the effectiveness; suggestions on how to promote such effectiveness has been raised based on results of living examples tests. Under this logic, the conclusion from the use of VAR model testament is: micro entities especially residents are the most important part of the transmitting mechanism of monetary policies, their behaviors have significant impact on the effectiveness of monetary policies; residents'optimal consuming behaviors could not respond sensitively to signals from monetary policies, their responses revealed that saving is preferred than consuming. Residential consumption and savings and economic growth are positively related, with consuming behaviors contribute more to economic growth than saving behaviors. Residential consumption and savings and merchandise prices are negatively related; with saving behaviors contribute more than consuming behaviors. That is to say, if the objective of central bank's macro control is economic growth, policies should be made on the basis of the impact on consuming behaviors; if the objective is to stabilize prices, policies should be set on the basis of impact on saving behaviors.