The Study Of Monetary Policy Aiming At Solving The Excess Liquidity Of Our Country

Entering 21st century, the world economy steps into a new expanding period. However, due to world's interest rate staying in a low level in a long time and the depreciation of USD originating from the vast American fiscal deficit and trade deficit, large excess liquidity emerged in world economy. From 2003, our economy has walked out of deflation and entered an ascending period. Since 2005, our economy has faced new challenges because of the inflow of international excess liquidity and the passive output of base money due to reason of domestic economy structure. With the problem of excess liquidity becoming more and more serious and complex, our central bank has taken a series of measures to solve the problem, especially in 2006 and 2007, the central bank took more aggressive measures to solve it, however, the problem still cannot be solved effectively.Because monetary policy cannot get apparent results in a short time, the effectiveness of monetary policy surfers from suspicion. In order to make people understand why the monetary policy could not get good results, furthermore, understand the effect of monetary policy in economy, and what's more is to make PBC can solve the issue of excess liquidity more effectively in future and alleviate loss of economy for adjusting, making the problem of excess liquidity solved when economy is developing healthily, this paper makes a research of the monetary policy between 2003 and 2007. The paper makes use of the method of combination of quantitative analysis and qualitative analysis and the combination of nominal analysis and empirical analysis. In the first part, the paper summarizes the literatures on the issue of excess liquidity of scholars home and abroad and ascertains the content of this paper. The paper makes an introduction of monetary policy mainly consisting of the concrete measures of monetary policy tools and its effects of this period in the second part. And then the paper analyses the dilemmas of monetary policy in present circumstances and the defaults of initial monetary policies in the third part. The paper makes an empirical test of the relevant effect of excess liquidity variation and the monetary policy by means of data between 1978 and 2007 in the fourth part. Lastly, the paper put forth some more feasible and sensitive suggestions to solve excess liquidity in the future according to the dilemma of monetary policy, the shortcomings of initial policies and the conclusions of empirical test.