Effect Study On Monetary Policies Of China In The New Period

Our country's economy have developed so rapidly since 1992. It is the important time of socialist market economy which establishes and consummates gradually. At the same time, the national financial regulation and control system has changed from the direct regulative pattern to the indirect regulative pattern. Within this specific economical and financial condition, how does our country monetary policies implementation effect. Especially in the current, our country supply and demand contradictory focus on the constitutive contradictory, how does the effect which was implemented by our monetary policies for promoting the development of three industries .This paper tries hard to settle this question with quantitative and the systematized analysis. This paper firstly retrospect the practice of our country's monetary policies since 1992. Secondly, Grainger causality tests, vector autoregression, impulse response function, and variance decomposition method was used to examine the effect of money supply with the years data from 1991 to 2004 and the quarters data from 1998.1 to 2005.2. Currency variable M0 (cash), M1 (narrow sense currency), M2 (generalized currency), economical variable GDP, GAP (primary industry GDP), GIP (second industry GDP), GOP(the tertiary industry GDP) as well as P (commodity retail price index of commodities) was selected to analyse the economical effect and the quantity effect by the monetary policies. After that, we gained these conclusion: (1) The money supply has significant exogenous features macroscopic economical. Various levels money supply bring significant influence to GDP, GIP and GOP , but is weak to GAP from 1991 to 2004. The relation between nmoney supply and the national economy present the attenuated tendency since 1998. (2), the influence to the economy existence time lags by M2 and M1 from 1998.1 to 2005.2 quarters. The fluctuatons of M2 have long-term positive effect to GDP, GAP, GIP, GOP and P, and the function time lags is 7 quarters, 3 quarters, 5 quarters, 3 quarters and 6 quarters. The impact to GDP, GIP and GOP also has long-term positive influence which produced by M1, the function time lags is 6 quarters, 4 quarters and 6 quarters. But the influence to GAP and P is quite complex. The whole looked that, the impact GDP which made by M2 and M1 is much more than to price. So, we can say the monetary policies's quantity effect is obvious. Finally, this paper proposed some monetary policies suggestions based on the diagnosis analysis result, and attempt to promote provide the theory support which is help to our country's economy development.