A Study On The Effectiveness Of Monetary Policy Under Different Exchange Rate Management Mechanism In China

Monetary policy from the perspective of the real exchange rate fluctuations, to influence the whole macro economy, is called "the exchange rate channel of monetary policy.A country’s monetary policy implementation and exchange rate system affects the overall operation of a country’s macroeconomic.On July 21, 2005 in our country, by the people’s bank of China, in a news release announcing about exchange rate management mechanism reform, based on market supply and demand will be implemented, reference to a basket of currencies, managed floating exchange rate system.The exchange rate reform main content includes: one is the exchange rate will be floating, according to the foreign exchange market supply and demand can reflect currency price signals;Secondly, the exchange rate may, in accordance with foreign trade balance to adjust the amplitude of the floating exchange rate, make the exchange rate more flexible;Three is the exchange rate will be a reference to a basket of currencies, a basket of currencies including the dollar, euro, yen and the yuan is no longer one-sided single peg to the dollar.The reform of exchange rate system can keep the yuan basically stable, and gradually realize the marketization of exchange rate, internationalization, the international balance of payments and the real economy, the exchange rate can really play its regulatory role.It also marks the Chinese exchange rate management mechanism to a flexible exchange rate system.Since our country implemented the exchange rate system reform in 2005, under the new exchange rate regime, the yuan’s exchange rate adjustments in accordance with market supply and demand, our country begins to implement the free flow of capital, managed floating exchange rate system, which makes the independence of the central bank’s monetary policy is also improved.This paper expounds the management floating exchange rate theory process of the impact of monetary policy independence, found that compared with the fixed exchange rate system, floating exchange rate can effectively alleviate the external shocks, and then enhance the independence of monetary policy;But excessive exchange rate volatility will through the current account and balance sheet channel to influence macroeconomic, thereby weakening the independence of monetary policy.In this paper, by combining relevant theories of exchange rate regime and international experience at home and abroad, using the contemporary mainstream econometric research methods, through the between January 1994 and December 1994, the monthly economic data, the phases of the empirical study and comparative analysis, using the statistical method, test the relationship between the relevant variables, and on this basis, the distribution lag model is established, at the same time, along with number of impulse response function to measure the impact of monetary policy effect, to know the exchange rate of China’s monetary policy transmission channels operation process and effect of conduction analysis under different exchange rate management mechanism, China’s monetary policy effectiveness is improved, and how to improve.Not only from the Angle of exchange rate transmission, it is concluded that the overall judgment, and to consummates our country monetary policy effectiveness put forward the corresponding policy recommendations, expect to further promote the reform of RMB exchange rate system, enlarge the exchange-rate flexibility, perfect the exchange rate formation mechanism of the market, to the steady open the capital account and improve the independence of monetary policy, increase the foreign exchange market risk prevention ability, at the same time, the exchange rate system must be used with other policy system, etc., for the perfect our country’s financial markets and the economy construction, has important theoretical significance and long-term significance.