Analysis On The Transparency And Validity Of Monetary Policy

Since the 1990 s, along with the inconsistency of time, the development of the rational expectation theory and the occurrence of events such as the Asian financial crisis, central banks over the world are becoming increasingly committed to raising the transparency of monetary policy, which is regarded as key in monetary policy framework. At the same time, the relationship between the monetary policy transparency and expected management effectiveness has become a hot topic in both theoretical and practical research and discussion. It is the ideal application of monetary policy transparency in western countries that caused the transparency construction of monetary policy in China.The significance of raising transparency lies behind the fact that it is conducive to enhance the effectiveness of monetary policy. And how to effectively stabilize prices has been the fatal factor taken into consideration when central banks make monetary policy. Naturally, guide and manage inflation become an important part of the effective implementation of the monetary policy. At present China is still a developing country, from 2011 to now the prudent monetary policy has been employed, which pay more attention to prospective and the control of market expectations. And improve the monetary policy transparency will help guide and stabilize the market expectations, as well as the effectiveness of monetary policy. Therefore, this dissertation attempts to analyze relationship between monetary policy transparency and the rate of inflation as well as sacrifice ratio to explain the fact that our country need to transparency.This dissertation firstly establishes a theoretical model for the analysis of monetary policy transparency and the relationship between the inflation and the cost of disinflation based on rational expectations and information asymmetry theory. Then build dynamic transparency index to quantify the level of transparency while using our data to empirically monetary policy transparency effect of policy in our country. Results show that the monetary policy transparency in China has worked well, which means the increase of transparency can not only reduce China’s inflation rate, but also the cost of disinflation. However the quantitative results show that the low levels of China’s monetary policy transparency, and high volatile. Therefore, in the end of this article reasonable Suggestions are put forward from four aspects of the target transparency, information transparency, decision-making transparency and financial knowledge popularization dynamics combined with the actual situation of our country, to further improve the transparency of the construction of our country.