Research On The Chinese Model Of Monetary Policy Rules

In essence,monetary policy rules discuss the operating principles of monetary policy,which is different from the judgment of the situation by decision.It focuses on the quantitative operation of specific monetary policy tools in advance to achieve monetary policy regulation.Generally speaking,the shortterm fluctuations of the financial market mostly come from the impact of market expectations,while the regular monetary policy operation is conducive to anchoring market expectations and avoiding the financial market fluctuations caused by the disorder of market expectations.At the same time,managing and guiding the market expectations well,and making the market expectations of micro-subjects and the macro-policy goals tend to be consistent,can make the monetary policy rules play a better control effect.After more than 20 years of market-oriented financial reform and the transformation of monetary policy regulation mode,China has initially had the conditions for monetary policy rules to play a role.In the process of opening up a socialist monetary policy with Chinese characteristics and constructing the framework of modern monetary policy,it is particularly important to study the Chinese model of monetary policy rules.The core of the research on the Chinese model of monetary policy rules lies in "making the past serve the present","making foreign serve China",guiding China’s practice and solving China’s problems.That is,on the basis of absorbing the academic thoughts and theories of monetary policy rules at home and abroad,the theoretical analysis framework of The Chinese model of monetary policy rules is constructed.And then to China’s monetary policy,financial markets,economic subject,structure as the research object,based on the development of Chinese financial market,interest rate marketization reform,exchange rate formation mechanism reform and management status,analysis of monetary policy rules applicable conditions in China,and then from the empirical and normative sense determine China’s monetary policy rules form,to resolve what China’s monetary policy rules are and should be.Finally,this paper studies the structural constraints of China’s monetary policy rules from the structural perspective and method,summarizes the practical experience of foreign monetary policy rules and their enlightenment to China,and then discusses the practical strategies to improve the regulation effect of China’s monetary policy rules.Through the research of this paper,the following conclusions are drawn:(1)First,this paper verifies the equivalence relationship between monetary policy quantity rule and price rule from the perspective of transaction equation and real money balance.At the same time,from the perspective of basic money,it is found that the contradiction of "quantity and price" is also the embodiment of the equivalence relationship between quantity rules and price rules of monetary policy.Then,the lag monetary policy rule model with time-varying parameters is constructed.The empirical study finds that the interest rate policy and quantity policy of the People’s Bank of China are gradually changing from "discretionary" to "rule-based",and the regularity of monetary policy is becoming more and more obvious.However,neither single price rule nor quantity rule is sufficient to explain China’s monetary policy practice,while mixed rules better fit the actual operation of China’s economy and achieve the stability of inflation and output.(2)By comparing the responses of the three monetary policy rules to inflation and output under the impact of risk shock,savings premium shock,technology shock and monetary policy shock,the most suitable monetary policy rule for regulating China’s economy is selected in a normative sense.The empirical results show that under the price rule,inflation and output can return to steady state in a relatively short time after the economy is hit by external shocks,which provides a stable monetary and financial environment for economic development and avoids the excessive impact of shocks on the economy.This is the regulation effect that cannot be achieved by the mixed rule and the quantity rule.At the same time,the People’s Bank of China follows the price rules to keep the fluctuation range of inflation to the minimum under the impact of risk and savings premium,and the fluctuation range of output to the minimum under the impact of technological progress and monetary policy.Therefore,price rule is undoubtedly the optimal monetary policy rule.(3)Structural contradiction is an important factor restricting the regulation effect and rule transformation of China’s monetary policy rules.In the credit market,the distortion of economic structure leads to the imbalance of the credit market,which leads to the appearance of "industrial hollowing" under the financial accelerator mechanism,which restricts the regulation effect of China’s monetary policy rules.From the perspective of the money market,under the constraint of soft budget,the central bank’s monetary policy operation with consistent words and deeds has instead formed a vicious circle of continuous increase in money supply and rising demand for rigid money of financial institutions,and led to the aggravation of economic structural contradictions.In the bond market,the financing support of the manufacturing industry from the bond market and its position and function in the national economy and social development are obviously disproportion.(4)Strengthening the role of monetary policy rules is the basis for promoting the transformation of monetary policy rules,breaking the constraints of structural problems,and thus improving the regulation effect of monetary policy rules.Promoting the transformation of monetary policy rules to price rules based on interest rates can make perfect financial market,market-oriented interest rate system,fully flexible exchange rate mechanism and effective expectation management play a better role.Meanwhile,it can also promote the solution of structural problems and have a better regulation effect.However,in order to realize the transformation of monetary policy rules and give full play to the effect of policy regulation,it is necessary to break the restriction of structural problems.Based on the above research conclusions,this paper suggests:(1)Promote the formation of a financial market with sufficient depth and breadth,and gradually strengthen the benchmark role of DR007,LPR,Treasury bond yield and other benchmark interest rates in the financial market.And continue to deepen the reform of the RMB exchange rate formation mechanism,establish an open and transparent modern monetary policy expectation management mechanism,manage and guide the public to form favorable market expectations for the operation of monetary policy rules,and strengthen the conditions for the functioning of monetary policy rules.(2)Continue to highlight the use of pricebased monetary policy tools and reduce the reliance on quantitative tools.The central bank will reform and improve the regulation and transmission mechanism of interest rates,establish a policy operating framework for the People’s Bank of China to effectively guide and regulate market interest rates,guide the public to make rational responses to interest rate changes,and promote the transformation of monetary policy rules to price rules with interest rates as the main focus.(3)Remove excess profits and implicit government guarantee of distorting sectors through reform,restrain irrational expansion of credit demand of distorting sectors,properly deal with soft budget constraints,remove rigid currency demand of financial institutions caused by soft budget constraints,and reconstruct the micro basis of national economy.At the same time,the central bank will give full play to the regulatory role of structural monetary policy tools,improve the macroprudential policy framework,and remove structural problems that restrict the regulatory effects of monetary policy rules.