| In March 2016, Premier Li Ke Qiang pointed out in the government work report that the target for economic growth rate for this year is between 6.5% to 7.0%. This signifies China’s economy is switching gear from high speed growth to middle to high speed growth. Since the financial crisis in 2008, the increase of cost, technological upgrade, the diminishing return of investment, the unsustainable of export led growth model, all of these factors have led China’s growth into a new normal. Under the new normal, reasonably select a medium target for monetary policy, is a guarantee for reaching the ultimate goal for monetary policy. On the basis of the existing monetary policy based on the monetary policy of our country selectable medium goals as well as its macro-control utility for a more detailed study and discussion.This dissertation to select medium goal of monetary policy as the core. First,we will start from reviews of domestic and international the choice of the medium goal for monetary policy.The reviews are the main controversy surrounding the choice of quantitative goal and intermediate-type intermediate price goal.The source of this theory argue that Keynesian and monetarist arguments, Keynesian believe that the interest rate is the core of a country’s monetary policy, and the monetarist school of thought emphasizes the role of the supply of currency.From the perspective of general theories on the topic,we detailed description of the concepts of medium goal for monetary policy, selection criteria and monetary policy transmission channel theory.Others, this dissertation looks back at the historic track record for the development of monetary policy in both China and the western world. Our country has always been based on the supply of currency as an medium goal, while in the "new normal" background, the interest rate as the representative of price-based monetary policy medium goal is more suitable for China’s actual situation, the main point of this article. Then,according to China’s economic "new normal" of basic economic situation, problem lists of current monetary policy options.Under the relevant principles, this dissertation has picked out parameters that are relevant to the development stage of China’s economy, such as the supply of currency, base interest rate of one year loans, SHIBOR and foreign exchange rate.In the empirical test, the sample data selected 2008 to 2015 monthly indicators related to economic variables, constructs VAR model using the generalized impulse response method variance decomposition considerations the supply of currency(M2), the benchmark lending rate,SHIBOR, exchange rates and other indicators, they were on the GDP growth rate, the consumer price level index(CPI) and the influence of the contribution of that test whether they are effective in the economic growth and price stability. According to evidence, the base interest rate for one year loans has the biggest impact on GDP. This means the current monetary policy based on money supply, which is the typical quantitative monetary policy, is not the best in selecting a medium target. In terms of price stabilization, money supply has a big impact on CPI. At the end, this dissertation has made suggestions for better finding a medium target and on to improve the efficiency of monetary policy. |
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