Monetary Policy Rules, Interest Rate Marketization And Macroeconomic Fluctuations

How to choose the optimal monetary policy rules to deal with external shocks and realize the healthy and stable development of macroeconomic is the focus of current experience.The reform of interest rate marketization has always been the focus of the central bank.In the post-financial crisis era,the traditional econometric model is no longer sufficient to cope with the current economic development.The macroeconomic analysis tools have changed from the traditional VAR or the cointegration model to the dynamic stochastic general equilibrium(DSGE)model.Dynamic stochastic general equilibrium model,which combines macro and micro perfectly,is highly recognized by academic circles and has become the mainstream of macroeconomic research at present.Have therefore,this paper used DSGE model to study the effectiveness of monetary policy under the background of interest rate marketization and the impact of interest rate marketization reform on China's macro economy.Firstly,we improved the construction of traditional hybrid rules,construct a DSGE model with selective characteristics,and calibrate the static parameters of the model using the calibration method.The dynamic parameters are estimated by Bayesian estimation method.Secondly,the effectiveness of quantitative rule,price rule and mixed rule are analyzed by using impulse response and social welfare loss.Then,we simulate the macro of China under the different steady-state equilibrium interest rate level.Economic fluctuations finally,the policy effects of quantitative rule,price rule and mixed rule in the process of interest rate marketization are compared.The empirical results show that:Judging from the estimation of the model parameters,the weight of the price-type rule under the mixed rule is 0.3912,which shows that the monetary policy rules in the regulation of macro-economy by the central bank of our country are more quantitative rules at present.The possible reason is that the hybrid rule constructed in this paper is more reasonable than the traditional hybrid rule.Therefore,the transformation of monetary policy rules is an urgent problem for China's monetary authorities.The comparison between impulse response analysis and social welfare shows that the hybrid rule is more effective than the quantitative rule and the price rule.Therefore,the hybrid rule is more efficient than the quantitative rule and the price rule.Better ironing macroeconomic volatility and improving social welfare is even more effective.The effects of different steady-state equilibrium interest rate levels onmacroeconomic fluctuations are simulated.The empirical results show that under external shocks,the initial effects of output,inflation,investment,consumption,interest rate and money supply decrease with the increase of steady equilibrium interest rate.The cycle back to the steady level is shorter.From the result of variance decomposition of output and inflation,with the increase of steady equilibrium interest rate,the external shocks explain the fluctuation of output and inflation continuously.From the point of view of social welfare loss,the loss of social welfare decreases with the increase of steady equilibrium interest rate.By contrasting pulse Impulse response analysis,variance decomposition and comparison of social welfare losses,market-oriented interest rate reform effectively ironed out macroeconomic fluctuations and reduced the loss of social welfare.The comparison of the effectiveness of quantitative rule,price rule and mixed rule in the process of interest rate marketization reform.Through impulse response analysis,variance decomposition and comparison of social welfare losses,we can deal with technological shock,cost driven impact and monetary policy shock,under different steady equilibrium interest rate levels.The ability of mixed rules to iron macroeconomic fluctuations and reduce social welfare losses is greater than that of quantitative and price rules,which shows that hybrid rules are the most effective in the process of interest rate marketization reform.