The Study Of China's Excess Liquidity Influence The Validity Of Monetary Policy

Since the reform and opening, our central bank actively uses monetary policy to manage the economy running and made great achievements. At the same time, we also soberly realize that the use of our monetary policy also faces many challenges, especially in the existing situation of excess liquidity.Excess liquidity not only increases the central bank monetary policy execution cost, reducing the enforcement, and makes the central bank faced monetary policy transmission effect weakens pressure, also leads to low resource allocation efficiency, cause huge opportunity cost. Excess liquidity has influenced monetary policy currency stability and economic development goals. Research of excess liquidity how to influence the validity of monetary policy, which helps the central bank to influence more profound grasp of our monetary policy operation rules and regulation, provide for the central bank with reference value suggestions. Therefore, this research has certain practical significance.In the research, we firstly study the basic problem of liquidity and related theory of excess liquidity and the validity of monetary policy, and comb the various viewpoints of the validity of monetary policy, and then these form the logic starting point of the full research. On this basis, the research analyses the influence of excess liquidity to the validity of monetary policy using the model CC-LM; Combined with the actual situation in our country, analyses the influence of excess liquidity to the transmission of the monetary policy tools to intermediate goal, and the influence of excess liquidity to the transmission of the monetary policy intermediate goal to final goal; using VAR model further empirical analyses the effect of intermediate indicator M2 to GDP and CPI in the excess liquidity condition; Theoretical and empirical analysis conclusion is:the excess liquidity to monetary policy tools of intermediate goal for monetary policy transmission and intermediate goal to final goal of conduction not smooth, affect monetary policy transmission effect, weakening the effectiveness of monetary policy; Empirical analysis shows that liquidity make monetary policy intermediate indicator M2 weakening the output, and reduce the validity of monetary policy, the excess liquidity also make monetary policy intermediate indicator M2 enhancing the effect of CPI, and increase the inflation pressure; in the end, according to the conclusion, making suggestions to eliminate the harmful influence of the excess liquidity to the validity of monetary policy.