Research On The Differences Of The Effect Of Reserve Requirement Rate And The Benchmark Interest Rate In China

Monetary policy tools play an important role in regulating China's macroeconomics,but mainstream economics has always been controversial about the effectiveness and choice of monetary policy instruments.In order to study the monetary policy effects of the required reserve ratios and interest rates,the article first compares the monetary theories of mainstream economics and the post Keynesian economics and finds that their most fundamental differences focus on whether the currency supply is endogenous or exogenous.From the perspective of the theory of endogenous money supply,the post Keynesian economics criticized the theoretical basis of the required reserve ratio policy tool--the monetary multiplier theory,and provided a theoretical basis for the monetary policy effect of interest rate policy tools,and obtained different conclusions and policy proposals from the mainstream Keynesian and Monetarism,which provide a new theoretical perspective for understanding the central bank's weakening of the required reserve ratio while selecting interest rates as the main monetary policy tools.The article reviewed the practice of adjusting the required reserve ratio and interest rates in China.In recent years,the frequency of adjustments to the required reserve ratio has declined while the use of interest rate policies has become more frequently as the marketization of interest rates continues to improve.In order to analyze the effect of the required reserve ratio and interest rate on economic growth and price levels respectively,the paper constructs the VAR model and impulse response function,and empirically analyzes the monetary policy effects of China's required reserve ratio and interest rate.The results show that the monetary policy effect of China's required reserve ratio is relatively weak,and its impact on economic growth and price level during the lag period is unstable.The main reason may be that institutional problems and currency are increasingly endogenous.While the effect of interest rate tools is relatively good,and interest rate tools have a significant impact on the economic growth and price levels.The above research shows that the role of the required reserve ratios as a policy instrument has gradually weakened in reality,as the role of interest rate policy instruments has been gradua-lly strengthened.Therefore,interest rate policy instruments should be given more attention in China.China should promote the reform of China's interest rate marketization,explore and find a benchmark interest rates that is more suitable for China's development.