An Analysis Of Mccallum Rule And Its Applicability In China -Theoretical And Empirical Study

"Law about People's Bank Of China"clearly stipulate the main goal of Chinese monetary policy is"to keep value of money stability , so as to promote the economic growth". It's necessary for the monetary authority to find a set of suitable instrument rule for our economic development in order to achieve this goal. From the specific control point , after going through the impact of the situation out of control of the finance in the beginning of 1990s, the people'bank begins to turn to regard money supply as the intermediary goal of the monetary policy progressively. But practical operation in the past few years indicate, there are some problems about oney supply as the intermediary goal in controllability, measurability and relativity. It can't make people satisfied. Therefore, on the basis of monetary policy rules about international and domestic economic theory, we introduce the McCallum rule. In order to research the applicability of taking monetary base as the intermediary goal of the monetary policy in China's economic environment.With the date from1994 to 2009, the paper Based on literatures about the McCallum rule, and used a series of methods, such as theory research and empirical research, qualitative analysis and quantitative analysis, standard economics and positive economics , comparative analysis and chart analysis and so on. The paper also use software such an Eviews, Excel etc., make an empirical test on the standard model and its three expansion forms of the McCallum rule.The results of empirical tests indicate that the McCallum rule can simulate the actual movement path of monetary in China to a large extent. Although the actual and simulated values appear a certain degree of deviation in some period. The basic money has a significant response on nominal GDP, inflation, exchange rates and foreign exchange reserves. In general, the Chinese monetary policy follows the McCallum rule. We can also find that the McCallum rule to some extent plays an important role in the direction(loose or tight) of the monetary policy in China.This paper take more emphasis on the combination of theory and practice. It analysis the application about the McCallum rule in China's monetary policy implementation comprehensively. The principal innovation of this paper is the appliance of empirical analysis to the research of the serviceability of the McCallum rule in Chinese monetary policy. It not only tested the standard McCallum rule, but also extended the standard model. And it analyze empirically the monetary policy in our country with econometrics methods in recent ten years and draw a more definite conclusion.