On The Choice Of Intermediate Indicator Of China’s Monetary Policy After Financial Crisis

This paper presents its content according to the basic theory, history evolution, dilemma faced at the present stage of monetary policy’s intermediate indicator, and the effectiveness of the other available intermediate indicator of monetary policy. In the basic theory part, intermediate indicator of monetary policy is classified, and the function and the selection criteria of the monetary policy’s intermediate indicator are clarified. During the evolution history of foreign monetary policy’s intermediate indicator part, compared the Keynesianism, the monetarist school and New Keynesianism. Depending on the different times and economic environment, each school has reasonable aspect. This part also introduces the new theory of monetary policy’s intermediate indicator. To summarize the general trends and developments of the historical evolution of monetary policy’s intermediate indicator in western countries, it would be summed up as:the choice of intermediate indicator is closely related to the country’s economic development environment, financial developments and conditions. The more serious the inflation is, the more attention the money supply target should be paid to. During the impact to the stable relationship between the money supply and the ultimate goal variables of financial innovation, most countries gave up or diluted the money supply target. Diversification of intermediate target, the separation of the target functions of the traditional intermediary has become a worldwide trend. After that, Monetary policy and intermediate indicator selection are settled systematically, putting forward the money supply index as a intermediate indicator is facing the unprecedented challenges. On the basis of empirical study for intermediate indicator in national monetary policy, the correlation between money supply as the intermediate indicator and ultimate goals is decreasing. Yet the interest rate market in China is far from well developing, its influence on ultimate goal and inflation targeting maneuverability are still limited. Theories above provide guide and theory foundation for seeking optimal monetary policy’s intermediate indicator during frequent financial innovation and high speed developing virtual economy period after financial crisis.Ultimately, come the conclusion and policy proposal that considering there isn’t a more suitable economic variables can replace the status of the money supply intermediate indicator, this paper argues that money supply intermediate indicator can’t be replaced unthinkingly. Monetary authorities should consider the changes of the indicator "all-system financing aggregate" to establish a platform for the research on the selection of China’s monetary policy’s intermediate indicator in future. From the perspective of macroeconomic policy coordination, promoting the stability of the financial system and structuring the macroprudential policy management framework, provide practical advice to the selection of monetary policy’s intermediate indicator of China.