The Research On The Selection Of Intermediary Goal For Monetary Policy In China Currently

By the end of 2007, global financial crisis caused by the credit crunch in United States has become the top hot spot. The United States'financial markets are obviously at a systemic risk. Liquidity shortage is becoming increasingly serious;the storm swept through Europe and the United States, and caused a global stock market plunge. The international financial crisis has already put effect on our country's economy, China's monetary policy, to a certain extent, also showed a marked lag, an important reason of this is the improper selection of the intermediary goal in the monetary policy framework. Therefore, the selection of the intermediate goal of monetary policy and regulation has been a great deal of concern. Whether our country really need an intermediary goal or not? Should we give up the money supply? If it does so, is there a position to make other choices? Furthermore, in what areas can we improve our country in order to improve the effectiveness of an intermediary goal? These questions are worth discussing in the current study.In this paper, I use intermediary goal theory to study the selection of China's monetary policy's objectives, at the same time, I also use advanced econometric to study the equilibrium relationship between intermediary variables and the ultimate goal of monetary policy in the long-run through the empirical research, and come to the conclusion that current stock price is not suitable as an main intermediary objective in China's monetary policy. In our country, we should use interest rate as the main intermediary target, while the volume of loans, money supply, exchange rates, asset prices mixed as supporting objectives.This paper is composed by six parts, including background, theoretical analysis, and the history of evolution in foreign country and in China, modeling and the conclusion. In the theoretical analysis of this paper, monetary policy and the ultimate goal of monetary policy led to the function of intermediary goal, after a comparative analysis of Keynesian school, monetarist school and school of Post-Keynesian, every theory of school-related has its own reasonable point. Theoretical debate provided support to the monetary transmission mechanism, followed by a model about intermediary goal of monetary policy, including a stable analysis and co-integration analysis of the volume of money supply, interest rate, stock price and gross domestic product, get to a equilibrium relationship analysis between money supply, interest rates and gross domestic product in the long-run. In summary, we get to a conclusion of the monetary policy for our country, so far, the basic intermediary goal should be like this, the basic money supply is currently effective, but its effectiveness is inevitably trend to decline, single goal is not feasible for the interest rate;asset prices can not be implied as the main intermediary goal. Under such circumstances, monetary policy framework for decentralization is the inevitable choice for our country. In future, the framework of monetary policy, under normal circumstances, the interest rate will be the main goal;in the special period of high inflation, control the camera choices can be the volume of money supply and loans. In addition, it should set up a analysis framework, including interest rates, money supply, loan amount, the exchange rate stock price and other economic variables.