Financial Stability And Forward-looking Expansion Of Monetary Policy Rules

Research point of view can be found by observing the early scholars,most of price stability and financial stability is considered to be equivalent concept,so in the frame of the conventional monetary policy,not outside the price stability goal to establish financial stability,rash as the financial crisis,however,has attracted more attention of academics and policy makers,you start thinking about conventional monetary policy is a comprehensive and reasonable target system.Price stability and financial stability,often appear "divergence",make the traditional monetary policy framework in the financial system is running an unstable situation,in the process of operation of macro economy is not fully identify actual situation,thus unable to formulate effective monetary policy to prevent the instability of the financial system spread to the real economy,so the stability of the financial system has become a problem we must consider the financial stability and stable economic growth and inflation should be as the ultimate goal of monetary policy the weight.And considering the actual situation of our country now,into the steady phase of economic development,more focus on to leverage and risk prevention aspects of the"problem" structure,monetary policy also gradually to the price change,the operation of monetary policy targets and intermediate targets began gradually to interest rates,although until now,the central bank didn't publish their choice is what kind of monetary policy rules reaction function,but from many scholars,the empirical analysis results can be seen when we adjust the interest rate the central bank of our country's operation in accordance with the properties of the forward-looking monetary policy reaction function.This makes it more realistic for this paper to introduce the constructed financial stability index into the forward-looking Taylor rule.Therefore,my graduation thesis chooses to study and construct the forward-looking extended monetary policy rule after introducing financial stability factors.The main content of this paper is how financial stability should be structured and incorporated into the forward-looking Taylor rule.This paper is divided into five chapters.The first chapter introduces the research background and significance,content and method,innovation and deficiency.The second chapter reviews the domestic and foreign literatures on the relationship between financial stability and price stability,the construction of financial stability index and the forward-looking monetary policy response function.Third chapter by selecting the appropriate indicators,using VAR generalized pulse get financial stability index of the variables on the impact of the output gap,so as to get their share respectively,and then respectively synthetic does not include the money supply and contains two index of the money supply,through an empirical comparison of two index,found that contains money supply CFSI can fully reflect the change of financial situation,suggests that although China's monetary policy from the quantitative to price change,but the money supply still occupy very important position,has a key role in influencing the output.Therefore,in the following article,we analyze CFSI including the money supply.Then,the impulse response of CFSI constituent variables is analyzed,and the constructed financial stability index is evaluated,and the corresponding historical events are reviewed.Multiple guarantees can be regarded as a proxy variable reflecting whether our financial system is stable or not.Fourth chapter will CFSI into prospectie,Taylor rule,and assume that when central Banks operating in the interest rate in our country has the characteristics of smooth,and-in the second quarter of 2013 to 2002 and 2002-2018 to get prospective extension of generalized moment estimator with Taylor rule respectively,by comparing the GMM estimation results can be seen that start after interest rate liberalization,interest rate adjustment for inflation expectations and financial stability,the expected response is more obvious,and the results are more significant.The fifth chapter summarizes the conclusions and puts forward seven Suggestions.Based on the above research,the conclusion is that for China's interest rate rules,we should pay more attention to inflation expectations and financial stability expectations when regulating interest rates.Although up to now,the central bank has not explained the use of a certain monetary policy rule response function,but from the results of empirical analysis,the central bank's operation in adjusting interest rates is consistent with the nature of the forward-looking monetary policy response function.On this basis,this paper puts forward several Suggestions:1.The central bank should promote the transformation of the monetary policy framework as soon as possible;2.Second,further improve the interest rate control system;3.Propose regular publication of financial stability indicators;Integrating financial stability factors into the forward-looking Taylor rule;5.Propose to incorporate the forward-looking Taylor rule into the monetary policy framework in China;Sixth,strengthen supervision,grasp the financial sector supervision and strengthen overall coordination;The transparency of monetary policy needs to be enhanced.