Research On The Effectiveness Of China’s Monetary Policy Under The New Normal

Since 2011,China’s economic and economic downward pressure is obvious.At the same time,the moderately loose monetary policy implemented at the outbreak of the financial crisis has led to excess production capacity in many industries and severe economic bubble,and the urgent need for economic restructuring and upgrading.Facing the structural downturn and inflationary pressures of the new normal economy,the central bank began to implement a stable and neutral monetary policyIn this context,it is of great practical significance to study the changes in the effectiveness of monetary policy and find the reasons for the changes so as to increase the output and the inflation effect of monetary policy.The article first summarizes the achievements of the Chinese and Western studies on the effectiveness of monetary policy,and then describes the macroeconomic situation of China’s monetary policy practice against the backdrop of China’s new normal.After that,we summarized the specific operations of China’s monetary policy from the quantitative,price-based,and selective monetary policy tools and briefly reviewed its implementation effects,and then summarized and analyzed the factors that influenced the effectiveness of China’s monetary policy in the context of the new normal state.Based on the preceding descriptive analysis,the article empirically analyzed the effectiveness of quantitative monetary policy instruments and price-based monetary policy instruments according to the different control ways of monetary policy.In addition,in view of the special background of the new normal of the economy,the study has increased the study of the effectiveness of monetary policy in the old normal period,so as to compare the changes in the effectiveness of monetary policy during the new normal period,and make the results more persuasive.The article constructs the SVAR model of quantitative monetary policy tools by using the money supply M2,the increment of social financing scale and the level of output and price.And it also constructs the SVAR model of price-based monetary policy tools using the average interest rate of seven-day inter-bank lending,output and price levels.Then based on the results of the two impulse response analyses,we can find out the key factors affecting the output of monetary policy and inflationary effects,and propose reasonable suggestions for improving the effectiveness of monetary policy during the new normal period.According to the analysis of empirical results,the effectiveness of quantitative monetary policy instruments and price-based monetary policy instruments during the new normal period of the economy has significantly declined,mainly as a reduction in the intensity of effects on output and inflation and a reduction in the effect of time.From this analysis,it can be concluded that unfavorable monetary policy credit and interest rate transmission channels are important reasons for the declining effectiveness of monetary policy.Combined with the analysis of the factors that influence the effectiveness of monetary policy,China should strengthen the construction of the monetary policy framework,clear the transmission channels of monetary policy,and at the same time purify the micro-market environment of monetary policy transmission,so as to increase the effectiveness of the monetary policy in the new normal economy.