Monetary Policy Control Framework Under Financial Stability

Since 2012,credit funds on the fast growing in China.The efficiency of the use of credit funds is very low,the lack of credit funds to support the real economy.The debt burden of the corporate sector,including the government financing platform,is rapidly accumulated,and the liquidity risk of the economic system is increasing.In the complex economic situation,the effectiveness of the current monetary policy continues to decline,the simple price stability as the goal of monetary policy is difficult to maintain the stability of the financial system.Therefore,in the new financial and economic environment,the establishment of an effective monetary policy framework,to promote the sustained and stable development of China's financial system,has important practical significance.In this paper we established a closed economy DSGE model,the model includes family,intermediate goods manufacturers,end product producers,commercial banks,real estate firms,shadow banks and the central bank behavior equation and constraint conditions.And China's data into the model to study,part of the data using the Bayesian estimation method,and defines the two different policy objectives of the central bank:One is the traditional monetary policy objectives to maintain price stability,the other is to give consideration to the financial stability of the monetary policy objectives.In this paper,we use the relevant economic data from 2004 to 2015.The impulse response analysis is used to directly reflect the impact of real estate price shocks and monetary policy shocks on the inflation and output of the main macroeconomic variables in China under the two different central bank objectives.Based on the data simulation analysis and financial stability objectives of monetary policy more help with the adjustment of China's output and inflation,also can effectively reduce the output and inflation on the impact of the real estate fluctuation.And,after the real estate price shocks,the monetary policy under the financial stability goal can make the inflation and the output to be subjected to the shock to return to the equilibrium state more quickly.