The Empirical Research Of Monetary Policy Intermediate Target’ Impact On Stock Market In China

With the rapid development of economy, our financial market continuous to expand, especially in thestock market. And the fluctuations of stock market will have more and more influence on our economicactivities. At the same time, the stock market has posed a new challenge that whether our monetary policycould have effective implementation. At present, the financial field concentrates on the impact that themonetary policy have on the stock market fluctuations. Since there is time lag in transmission of monetarypolicy, the monetary policy variables become especially important.This article mainly analyzed how the monetary policy variable affects the stock market fluctuationsfrom the theoretical and empirical point separately. In theory, it briefly summarizes the influence thatmonetary policy intermediate target have on the stock market’s fluctuation, mainly including the structureof the monetary policy target system, the concept of monetary policy intermediate target, the evolutionprocess of monetary policy intermediate target, selection standards and classification, the commonintermediate target and the effect, etc; Then, it expounds the influence that monetary policy intermediatevariables have on the stock market; Empirically, it use econometric research method, based on the latestdata and typical variables, has demonstrated the influence, in order to effectively illustrate the relationshipbetween monetary policy intermediate variables and the stock market. The measuring methods involved inare mainly: Unit Root Test, Cointegration Test, Granger Causality Test, Impulse Response Function andVariance Decomposition Analysis.We may draw a conclusion from the demonstration: the monetary policy intermediate variables haveinfluence on the stock market fluctuation during the implementation of monetary policy. The money supplyand the interest rate in the monetary policy intermediate variables are in conformity with the theory,although time lag exists in the interest rate. However the empirical testing is not completely consistent withthe theoretical analysis in money supply. Based on the reality, finally we may bring up some suggestions:improve our monetary policy transmission mechanism, make use of monetary policy tools reasonably andeffectively; push forward the marketization of interest rate and improve the RMB exchange rate mechanism;improve the independence of the central bank, enhance the reliability of monetary policy.