A Study On The Effectiveness Of China 's Monetary Policy Intermediate Target M2

Monetary policy is the behavior of the monetary authorities, which refers to measures that affect all aspects of social and economic. Intermediate target of monetary policy is related to the effect of monetary policy operation, it is a bridge between the instruments of monetary policy and the ultimate goal of monetary policy, it plays an important role at the formation of an effective monetary policy transmission mechanism. Researching and controlling intermediate target of monetary policy helps the central bank to achieve the ultimate goal of monetary policy and to achieve management of macroeconomic functions. In recent years, with China’s economic grown, the domestic financial market constantly improved, financial instruments innovative and financial products enrich, academia and the monetary authorities have a broad controversy of broad money supply(M2) is fit to continue as the intermediate target of monetary policy. Therefore, exploring the intermediate target of monetary policy under the new situation has great significance to ensure the healthy operation of macroeconomic.The study of the effectiveness of intermediate target of monetary policy has been the research of many domestic and foreign economists, scholars have summed up a number of intermediate target of monetary policy theory and ideology, including price-based theory, quantitative theory, Taylor theory, Poole theory and money supply weighted level thinking. Due to the different environment of economic, the different methods of study, the different selected data and other reasons, lead to different results of the final study. Under the circumstances of the central bank continue to adhere to monetary policy regime with the intermediate target of monetary policy, which variables should be chose as intermediate target of the monetary policy is the focus of controversy, Keynesian interest rates or monetarism money supply.On the basis of the history of development of intermediate targets on the world monetary policy and the results of previous studies, the paper studied and analyzed the selection of variables of intermed iate target of monetary policy. Intermediate target of monetary policy variables for this study is to compare the broad money supply M2 and M2 +(the money supply added the commercial paper issued when the year on the basis of the broad money supply M2), the first attempt of the analysis of the money supply M2 + as an intermediate target amount of the effectiveness of monetary policy is better than the effectiveness of the money supply M2. In this paper, we used the data from the first quarter of 2004 to the third quarter 2014 data, econometric analysis through vector auto regression analysis method to get: the bill could be included in the broad money supply as variables of intermediate target of monetary policy, the effectiveness of the correction currency supply M2 + is better than the validity of current money supply M2 as an intermediate target of monetary policy. Under the current situation, the central bank may try to fix the caliber of the money supply in the existing money supply basis, to ease effectiveness of the money supply as an intermediary target amount decrease.