A Study About The Validity Of The Intermediate Target In China

Intermediate target of monetary policy is an important bridge which connect operation target with ultimate goal. The selection of intermediate target and their effectiveness, to a large extent, determine the final goal. Therefore, the monetary authorities choose the correct intermediate target to ensure its effectiveness during operation, will contribute greatly to the completion of the ultimate goal of monetary policy.In the mid-90s of the last century, according to the macroeconomic situation, monetary policy intermediate target from the credit scale transition to the money supply. Running more than ten years since the money supply as the intermediate target of monetary policy has achieved some results, but many problems were exposed. Faced with this situation, with regard to the money supply whether to continue as an intermediary goal, in our country there is an extensive dispute between scholars.In this paper, recalling China's monetary policy transmission mechanism and the intermediate goal of the development process based on qualitative analysis to money supply as the intermediate target problems while using econometrics to assist tests and vector autoregressive (VAR) model analysis goals relevance. Pointed out that the current economic system, because of the money supply at all levels of statistical standards of debate, the supply of its own existence "endogenous" and other reasons, led to the effectiveness of intermediate targets have been greatly reduced. At the same time learn from western countries the evolution of intermediate goals, combined with our current economic situation and monetary policy system, and demonstrated the interest rate for the currency to establish the feasibility of intermediate goals.