| Since 1994, China’s monetary authorities conducted the first exchange rate reform will be a long two-track exchange rate policies hinder unification of China’s economic development, the reform of the release of a number of reform dividend, after long-term balance of payments surplus in the stage, at the same time, GDP the growth rate is maintained at a high level. July 21, 2005, People’s Bank of China implemented a secondary exchange rate reform, the reform on the situation, greatly promote economic growth, but also to generate long-term stable alternative impact on China’s monetary policy, while rapid economic growth in the country also produced a negative impact on some of the columns. Therefore, the long-term exchange rate policy of monetary policy substitution effect worth to explore research.From the perspective of the theory of the monetary approach to the analysis of the substitution effect in generating mechanism. The method that the international payments imbalances due to the currency market imbalances, increase or decrease in foreign exchange reserves is a national demand for money and money supply imbalance reflects that a country’s rapid economic growth will lead to balance of payments surplus, and the international balance of payments the formation of the surplus is due to rapid economic growth due to the impact of the currency market.Since 1994, our economy continues to grow rapidly, and the international balance of payments surplus continued, first from the theoretical point of view the appearance of compliance with the monetary analysis, so this to our country’s rapid economic growth and balance of payments surplus, for example, verify the monetary analysis method explain the ability of our special phenomena. Meanwhile, the RMB exchange rate policy research substitution effect of monetary policy on the use of PVAR models.The main point of the paper is as follows: First, based on the empirical analysis of the results showed that the current exchange rate policy of the substitution effect of monetary policy still exists, due to the current interest rate market is in the process of interest rate market-oriented mechanism is not perfect, old the monetary policy regime are still many disadvantages, so the exchange rate policy for the substitution effect and alternative channels of monetary policy still exists. Secondly, the introduction of the exchange rate and stock market factors in money demand function,in order to test the outside pressure on RMB appreciation to adjust our view of the balance of payments viability, interest rates and monetization variable degree. The results show that the exchange rate policy will be our long-term stability of the money demand function with the impact of monetary and exchange rate regime reform is imminent. |
