Optimal Monetary Policy China's Double Tack Under The Phillips Curve

Optimal monetary policy has always been the focus of debate in theory, and relevanttheories are emerging all the time. This article is based on the following five parts:The first part is the introduction of the research results by scholars of Phillips curveand its development on optimal monetary policy, and come up with the core problems,explained the basic research methods and innovation of this paper.The second part is mainly to establish a framework for the dual-sticky Phillips curvemodel, briefly introduced the Generalized Method of Moments (GMM) and use themethod of GMM to estimate the model parameters, testing the fitness of the model to thesituation of China’s data, and come to conclusion that dual-sticky Phillips curve model isapplicable to China.The third part is mainly to establish a utility function of monetary policy based on thedual-sticky Phillips curve model. By solving the utility function, we get the optimal path ofoutput and price, come to conclusion that in the context of dual-sticky Phillips curve model,inflation targeting monetary policy is the optimal monetary policy for China.The fourth part introduces the connotation, characteristics and the implementationprerequisite for inflation targeting monetary policy, and come to conclusion that China isnot fully prepared to implement inflation targeting monetary policy, but in according withthe transition period, put forward specific policy and corresponding recommendations.The fifth part is a summary of the entire article, combed the entire article ideas,emphasizing the dual-sticky Phillips curve model is applicable to China and inflationtargeting monetary policy is the optimal monetary policy for China.