Monetary Policy Tools Rule And The Empirical Research In China

People have debated on whether monetary policy should be carried out under rules or discretion. Monetary policy should commit to rule and abandon the discretion in the long run. The discretion with time inconsistency will give rise to inflation bias. Monetary policy rule can acquire time consistency by making a credible commitment to follow the monetary policy arrangements which are set in advance,so inflation bias will be eliminated. Nowadays monetary policy rules are not confined to the fixed monetary tool variables enacted by monetary authority,but a prescribed guide for monetary policy conduct, including instrument rules and targeting rules.General rule of the monetary policy, including monetary policy theory and the basic principles of the time. Special rule of the monetary policy refers to the monetary policy according to the change of economic operation to adjust the basic requirements of monetary policy. Mainly include monetary amount rules, Taylor rule, McCallum rules, inflation scaling rules. Monetary policy rule theory in practice is continuously expanding. Western monetary policy rules on China's monetary policy has four aspects: first is the revelation Monetary policymakers should be analyzed research money supply target is reasonable, and the future could have other alternatives problem; it is Monetary policy goals should be selectively interval-valued, instead of a single value form; the immobility it is to want to timely cut interest rates as money Policy intermediary goal; The fourth is to further increase the transparency of monetary policy.This paper will discuss the application of monetary policy rules for China on the basis of some theories. By means of quantitative and qualitative analysis,it discusses the application of Taylor rule for China.