The Stability Of Tests For "Liquidity Trap" In China's Monetary Policy And Its Effectness Analysis

In recent years,the central bank has repeatedly lowered the nominal interest rate,the nominal interest rate has reached the lowest level in history.At the same time,the gap of M1 and M2 continues to expand and the private investment continues to decline.In the economic circles,discussions of monetary policy has been plunged into the "liquidity trap" began to increase.At present,the research on "liquidity trap" mainly focuses on the theoretical analysis and policy research.The empirical analysis mainly focuses on Japanese economy and monetary policy.There is little empirical research to use the data of China in recent years to test if the monetary policy has felled into "liquidity trap".To solve this problem,this paper makes a literature analysis and empirical tests.Firstly,the money demand function of fixed coefficient is established,and the interest rate elasticity of money demand is obtained by using the data from the first quarter of 1995 to the fourth quarter of 2016.The equation is not stable by Chow test.And then the paper constructs the money demand function of time-varying coefficients.The money demand function is deformed into the form of the state space model,and the interest rate elastic trajectory is obtained by Kalman filter.The results show that with the decrease of interest rate,the time-varying interest rate elasticity does not increase significantly,which shows that China's monetary policy is not caught in the "liquidity trap." We compared the elasticity trajectories of fixed coefficients and stochastic coefficients,confirming the stability and consistency of our test results,and given the more definitive test conclusions of the "liquidity trap" test.Finally,In order to explain the effectiveness of the monetary policy which in non-"liquidity trap",using the data from the first quarter of 1996 to the fourth quarter of 2016,the VAR model is constructed to study the relationships among real interest rate,actual output and currency shock and tested the validity of monetary policy.The results show that the real interest rate is the Granger reason of the Granger cause,the monetary shock is the real interest rate Granger reason,according to the impulse response function,the positive real interest rate impact on the actual output will cause negative impact.This shows that China's monetary policy is effective,monetary policy transmission channel is also smooth.Based on the above empirical tests,the paper put forward some recommendations: First of all,according to the conclusion of this paper,China's monetary policy is still effective,so the monetary authorities should continue to promote sound monetary policy to maintain price stability and develop the economic.Second,use the zero interest rate or low interest rate policy carefully,although China is not caught in the "liquidity trap",the long-term use of the policy will not only have a negative impact on the banking,but also make the economy face "liquidity trap" risk.Finally,in order to prevent the "liquidity trap",we need to promote investment and stimulate consumption.The implementation of private investment policy to promote private investment growth,promote tax reform to stimulate consumption are effective means to expand domestic demand,and keep the economy away from the "liquidity trap."...