The Applicability Of The Analysis Of Monetary Policy Rules In Our Country

The intellectual origins of modern monetary policy in the mercantilist period,and the period of classical economics major development has experienced500yearsof theoretical exploration and practical work. China has implemented monetarypolicy is shorter, this statement of the monetary policy in1984, began theimplementation of monetary policy in the true sense of the independence of thePeople’s Bank of China in1984. Shorter time for development of the monetarypolicy rule, in1998, the Central Bank of China macroeconomic regulation ofindirect money supply only by direct credit control to the initial establishment of themonetary policy rule. Monetary policy rule is part of the monetary policy system,linked to it monetary policy intermediate target and the ultimate goal to have asignificant impact on whether the validity of China’s monetary policy. Although therule is a constraint of the central bank, but this constraint is to promote monetarypolicy to establish a commitment mechanism to avoid the monetary policy toshort-sighted and opportunistic. Research policy rules can not only provide effectivesuggestions for China’s People’s Bank to formulate monetary policy, reducing thedynamic inconsistency of monetary policy, can also evaluate the effectiveness ofmonetary policy in China to provide the basic framework of an observable, so thatpeople can effectively measure the fact that effects of monetary policy and socialwelfare. This article is for the purpose of trying to Taylor rules and McCallum rulesfor the comparison of theoretical and empirical analysis, in order to find the onesuited to China’s monetary authorities operating rules.This article is divided into a total of six chapters, the main choice of method,combining normative and empirical analysis and historical analysis, comparativeanalysis. Mainly in the theoretical analysis of a brief analysis of historical analysistool of monetary policy rules as well as implementation of the history of China’scurrency policy rules, McCallum rules and the Taylor rule applicable in China from the perspective of monetary policy system sex. The analysis showed that the ultimategoal of monetary policy, the goal is the same for both the target and the monetarypolicy in our country are applicable. From the intermediary goals and operatingobjectives, and operating tools, McCallum rules more in line with the provisions ofChina’s central bank act. The coefficient of the reaction of these two models are inline with the theoretical requirements, indicating the trend of China’s economicoperation of these two rules can be simulated, but comparatively speaking,McCallum rules are more stable. From the results of theoretical analysis andempirical analysis, McCallum rules apply to China, the Taylor rule is only able toprovide some suggestions for China’s monetary authorities. Further from theempirical results can be seen that the two rules model the coefficient of the inflationgap is significantly greater than the output gap coefficient, indicating that China’smonetary authorities are more likely to maintain price stability, price stability andeconomic growth dilemma, which and in line with China’s current economicsituation, China’s policy objectives within a short time the current CPI increaseshould continue to maintain price stability. Summarized in the article, the end of thisarticle pointed out that the innovation of this paper is mainly reflected in the latestdata and research methods in the theoretical and empirical analysis, there are stillsome shortcomings, the analysis that the author is limited and because of the timethis article not deep enough, it will be my future research direction.