Research On The Influence Of Central Bank Financial Strength On Deviation Of Interest Rate Under Taylor Rule

Since the outbreak of the global financial crisis,the scale of central bank balance sheets has grown and the quality of assets has gradually been eroded.The international community and academia began to realize the central bank's important position in the governance of the economic crisis and the fact that financial strength maintains a sufficient level is important to the central bank's response to the crisis.Since the Chinese economy entered the new normal station,foreign exchange reserves have declined in size.The People's Bank of China has introduced a series of unconventional monetary policies to ensure the monetary demand for economic growth.In the central bank's balance sheet,the changes in the structure of assets and liabilities,indirectly performs as the financial strength changes.Therefore,we set out from the central bank's balance sheet to explore whether changes in financial strength will affect the effect of monetary policy.Starting from the balance sheet of the People's Bank of China,this paper analyzes changes in the scale and structure of the central bank's assets and liabilities,combines with the accounting characteristics of the People's Bank of China,and constructs and calculates the two central bank financial strength indicat ors that cover the income of seigniorage or not.Using the GLM model,regress Taylor's rule of expansion type,calculate deviation degree between Taylor's rule interest rate value and actual value of interest rate,build ECM model to test the impact of the changes in the structure of central bank's balance sheet on financial strength,and influence of financial strength changes on interest rate deviation degree.The results of the study indicate that the changes in the balance sheet structure of the Central Bank do have an impact on financial strength and have different effects on the financial strength of the two calibers.Specifically,the increase in the proportion of unconventional monetary policies will weaken the two financial strengths.The change in t he proportion of foreign exchange accounts affects the financial strength of the two calibers differently.The influence of narrowly defined financial strength on the degree of deviation of interest rate will gradually increase in the short term,and will gradually disappear over a long period of time.This means increasing the financial strength of the Central Bank and will enhance the effect of monetary policy in the short term;the broad financial strength will have a negative impact on the long-term negative effect of interest rate deviation.For a longer period of time,the central bank's financial strength,which considers the seigniorage tax revenue,will have a more lasting effect on the implementation of monetary policy.