The Research On The Effectiveness Of Monetary Policy Of China

Monetary policy is one of the most important tools of macro adjustment and control. It is an important method of macro adjustment and control policy, economic growth and construction adjustment of economy by the monetary authorities. Ever since the1930s, authorities of developed countries have placed much emphasis on monetary policy, which in turn has made great contribution in the development of national economy development and money stabilization.Monetary policy is the focus of the academy of economics, since the day of its born. Although there were debate on the relation between monetary policy and economic growth, employment rate and inflation, most of the economists and authorities agree that monetary policy indeed has influence on the macro-economy. Monetary policy has become an important tool in the macro-economy adjustment of most national governments.During the evolution of monetary policy of developed countries, both of the monetary policy tools and monetary policy intermediate goal has also evolved. From the proposal to the abandon of policy on reserve against deposit, from the use of money supply to the use of interest as intermediate goal, the change of monetary policy reflects the development of economy.Because of the gap between Chinese and developed countries’ economic system and development, there are differences between Chinese and developed countries’ monetary policy. The policy on the reserve against deposit is still an important monetary policy tool of China but is already abandoned by developed countries for its fierceness. Most of developed countries rely on interest as monetary policy intermediate goal, while Chinese government uses monetary policy with money supply as intermediate goal. The monetary policy in China is proposed as the establishment of the central bank in1984. The ultimate goal of Chinese monetary policy is to stabilize the commodity prices, boost the employment, develop the economy and balance the payment. In the past three decades, China majorly took the monetary policy with money supply as intermediate goal. With the reform-and-open and the development of the Chinese financial market, the financial environment of China has changed dramatically. It has witnessed the drop of the dependency between money supply and macro-economy. The effect of applying monetary policy with money supply as intermediate goal has become weaker. In recent years, the People’s Bank of China strengthened the use of interest tool, and there are some effects. However, China is in the middle of reform of marketization of interest rate, there are debates on the use of money supply or interest as monetary policy intermediate goal. Therefore, it is of theoretical and practical importance to study the effectiveness of Chinese monetary policy with money supply and interest as monetary policy.This thesis firstly studies related policies of monetary policy, then empirical analysis the effectiveness of the choice of monetary policy intermediate goal, and reserve against deposit, notes of the central bank as monetary policy tool of China.Finally, we made a conclusion that monetary policy with money supply as monetary policy is more suitable for China at current phase than with interest rate as monetary policy. China in a short time should insist on the monetary policy majorly with money supply as monetary policy; in a meanwhile, moderately take the monetary policy with interest as monetary policy, and actively progress the marketization of interest rate to prepare for the monetary policy with interest as monetary policy.