A Study On The Applicability Of Taylor Rule In China Under The Condition Of Opening Up

In 1996,China began to take money supply as the intermediary target of monetary policy,and the way of monetary policy regulation has become quantitative regulation.However,with the rapid development of financial derivatives,the financial market is becoming more and more complex,especially the continuous development and upgrading of shadow banks and the emergence of financial disintermediation,which makes the liquidity supervision of the central bank more and more difficult The larger,so many researchers began to think that money supply is no longer suitable as an intermediary target,the corresponding research on interest rate as an intermediary target is also more and more.At present,the central banks of many countries in the world have become price-based regulation with interest rate as the intermediary target,and have adopted regular monetary policies.At present,China is in the transition stage from quantitative regulation to price regulation,and Taylor rule is the representative monetary policy rule of price regulation.Therefore,this paper will discuss the applicability of Taylor rule to China's monetary policy.This paper first studies the theory of monetary policy rules,first distinguishes the discretionary monetary policy from the regular monetary policy,then proves that the regular monetary policy is better than the discretionary monetary policy by using mathematical analysis.Finally,it summarizes the principles that the central bank should abide by when designing monetary policy,and expounds the operation framework of the central bank under the monetary policy rules in detail.On the basis of the above theoretical analysis,this paper analyzes the applicability of Taylor rule in China according to China's national conditions,and the results show that China basically meets the applicable conditions of Taylor rule.Later,the empirical analysis is carried out.Based on the original Taylor rule,the response function of monetary policy is constructed by adding monetary factor,capital factor and exchange rate factor.The result shows that the Taylor rule with monetary factor,capital factor and exchange rate factor is applicable to China's monetary policy.The specific results are as follows: interest rate adjustment in China In addition,interest rate regulation can also play a stable role in inflation and output,while the opposition to asset prices does not pay too much attention,and interest rate regulation can not mention a certain regulatory role in asset prices;the actual effective exchange rate has a negative correlation with interest rate,which shows that interest rate policy in China can change exchange rate to a certain extent.At last,according to the conclusion,combined with some conditions of monetary policy rules,this paper puts forward corresponding policy suggestions.