Study On Effect Of Quantity And Price Based Monetary Policy Instruments In China

The stable development of the macro economy of a country cannot do without theuse of monetary policy. The correct choice of monetary policy tools plays an importantrole in policy environment. At present, the effectiveness of quantity and price basedmonetary policy tools has aroused heated discussions of the domestic theoretical circlesand industry. In this context, analyzing the different monetary policy tools andcombining with the current economic situation and researching on the effectiveness ofChina’s quantity and price based monetary policy tools for us to develop our China’sfuture monetary policy has important realistic meaning orientation of financial reform.This article introduces the monetary policy instruments from the theoretical level.It analyze the monetary policy, and then introduces the theory of monetary policy tools,mainly analyzes the quantitative monetary policy tools and price policy tools ofmonetary policy effect and restriction factors; Secondly,the article introduces theconcrete application of various monetary policy tools in our country, and has carried onthe brief analysis; Then considering the research validity and availability of data and theoperability of monetary policy under the actual situation in China, this article regardslegal deposit reserve rate and one-year benchmark lending rate as a representative of thequantitative type and price of monetary policy tools. Then it uses quarterly data from1998to2013, building VAR model and impulse response function and variancedecomposition technique type price of our country monetary policy tools andquantitative monetary policy tool to analysis of the effect. The empirical results showthat these two kinds of representative tool of money supply will have an impact tooutput and prices. The impact of interest rates is higher than the deposit reserve rate.Interest rate have greater lag than the deposit reserve rate. Finally, based on the resultsof empirical research, and combined with the present status of the macro environmentand the economy in China, thus proposed quantitative monetary policy tools and theprice is the effectiveness of monetary policy tools policy recommendations, optimizethe monetary tools, and paying attention to the collocation of the quantitative tools andprices, flexible use and regulation of the economy.Not long ago, the central bank monetary policy Secretary Zhang Xiaohui said,China monetary policy will be more conditions gradually enhanced price type tools tointerest rates as the core role, from the emphasis on quantitative control conversion to more use of price regulation, this paper analyzes the two kinds of monetary policy toolsfrom theoretical and empirical, to know the real economic problems is a timelyexploration, has important theoretical and practical significance.