Does An Aging Population Undermine The Effectiveness Of China’s Monetary Policy?

According to the National Bureau of Statistics,the elderly accounted for more than 14%of the population in 2021,which means that China has become a deeply aging society,and changes in the age structure of the population will have a profound impact on the macroeconomic environment and economic policies.Due to the long-term implementation of the family planning policy,the age structure of population presents two characteristics:One is the accelerated aging of population.Second,China’s aging population shows an obvious "getting old before getting rich",and more and more researchers believe that China’s demographic dividend is gradually disappearing.With the aging of the population,people will change their original economic behaviors such as consumption,savings and investment,which will affect the macro-economy from both supply and demand,and then affect the regulation effect of monetary policy.According to existing research,demographic change is not a short-term,rapid process,but a slow long-term trend.The impact of population structure on the effectiveness of monetary policy concerns the sustainability of our economic growth and may lead to changes in the trade-off between macroeconomic policy objectives.In this context,the study of the influence mechanism of population aging on the effect of monetary policy has very important theoretical value and practical significance.Based on the theoretical analysis,the author firstly selects Chinese macroeconomic data from 1990 to 2021 to analyze the overall effect of demographic age structure on monetary policy by using the method of SVAR and IVAR technique.Secondly,using the panel data of 30 provinces in China from 1994 to 2020,the author introduce the dependency ratio of the elderly into monetary policy effect equation.It is found that the population aging weakens the effectiveness of quantitative and price-based monetary policies and proved that population aging is one of the reasons for the regional effects of monetary policy.Finally,this paper explores the specific channels through which population aging affects monetary policy by using data of Chinese A-listed companies and banks.Therefore,this paper confirms that population aging weakens monetary policy effect through bank lending channel and interest rate channel,and suggests that China consider demographic factors when setting monetary policy.According to the conclusions drawn in this paper,the following suggestions are put forward:First,the possible impact of population aging on aggregate demand policy should be fully recognized.When formulating and implementing monetary policies,the central bank should fully consider the age factor of the population,prudently evaluate the selection of intermediate targets and predict the effect of monetary policies.Second,pay attention to the regional heterogeneity of monetary policy,accurately measure the transmission effect of monetary policy in different regions;Third,strengthen the interest rate channel and credit channel transmission of monetary policy.We will deepen market-oriented reform and scientific and technological innovation of enterprises,and further leverage the advantages of structural monetary policies,such as targeted reserve requirement reduction and financial inclusion.We will promote the growth of production efficiency and capital profit rate in underdeveloped regions,create a sound economic operating environment and development prospects,and thus provide a smooth micro basis for the transmission of credit and interest rates of monetary policies.The research significance and enlightenment of this paper are as follows:the current trend of population aging in China has become a fact.So in this paper,we study the effect of population age structure changes in monetary policy effect mechanism,to avoid invalid Japan and other developed countries monetary policy lessons,in the future may coming depth under the background of population aging in our country,to improve the effectiveness of monetary policy in our country,the country’s economic development has a forward-looking strategic practice significance.