Empirical Analysis On The Application Effect Of China's Required-reserve Policy Instrument

Looking back upon the history of our country's financial adjustment,legal deposit reserve system is one of the most commonly used monetary policy tools of the central bank.From the standard theory of monetary policy,the transmission mechanism of the policy tool is changing the monetary multiplier and then realize the goal of adjusting the money supply.Because this tool directly changes the money multiplier,and for financial enterprises who directly response to the policy,under the condition of the constant deposit and lending interest rates,there exists constraint of budget mechanism critical point.Therefore,compared to other monetary policy tools,its policy effect is violent and limited.Also due to this reason,typical market economy countries have gradually reduced the use of deposit reserve tool,some countries even cancelled this policy.But because of the great particularity of economic system and market environment in China,the deposit reserve system is still used frequently for it's high efficiency.Along with the change of economical situation and advancement of the interest rate liberalization process,the perfection of deposit reserve policy at a practical level is worth studying by China's central bank theory or monetary policy theory.In order to constantly improve the adaptation of monetary policy practice to economic development,the study on the effect of legal deposit reserve policy and analyzing the institutional and environmental reasons of its influence is very realistic.Based on this starting point,the paper is divided into theoretical part and demonstration part.The first part introduces the application and development of the reserve requirement policy in typical market economy countries.This part aiso analyzes the development of this policy tool in China,as well as the difference between the policy transmission mechanism of China's legal deposit reserve policy and the theoretical way.The empirical part adopts the vector autoregressive model to carry out empirical analysis on the implementation effect of the statutory reserve of deposit policy in China from 1998 to 2002,2003 to 2007,2008 to 2011 and 2012 to 2017.This part mainly analyzes the influence of the change of legal deposit-reserve ratio to the broad money supply,the consumer price index and the Gross domestic product.Through the empirical analysis,practical conclusions can be drawn as follows.First,in normal macroeconomic situations where exists no prominent economic issues,the use of deposit reserve policy directly results in monetary multiplier changes and affects the money supply.This reflects the policy signabe in a accurate way.From the aspect of real economy operation,the change of policy cannot obviously affect the fluctuation of consumer price index and gross domestic product,which shows the use of this policy tool can ensure stable economic development level on the premise of reasonably increasing or decreasing the money supply.Secondly,in certain stages of economic development,especially when some special problems exist in economy(such as 2003-2007),the uses of this tool who has “quasi administrative” characteristic often result in policy effect deviating from the policy goal.From the perspective of theory and practice,the relevant empirical analysis reflects the effectiveness in China's special economic system environment on the one hand.But it also reflects another situation,namely in the environment where economy market is becoming more and more prominent,the use of this policy tool needs to be improved in controlling opportunity and controlling pertinence.Based on above analysis,this paper puts forward the corresponding policy suggestions on improving the policy tool application.