An Analysis For Validity Of Money Supply As The Intermediate Target

Monetary policy has been an ageless topic no matter how mature the economy is,. As we know, our country take the money supply as the intermediate target of monetary policy.With the rapid development of off-balance-sheet activities and indirect financing activities, also with the marketization of interest rate, its validity and rationality is questioned by many scholars. From the viewpoint of intermediate goal ?s controllability, measurability and relevance, we use a large amount of data and empirical analysis to research the efficacy of the M2 measure.And then we conclude that:(1) In the long runM2 always exist error between actual value and expected value,and its error sequece?mean value is not 0.But from 2010 to 2014, its error respectively is 2.7%, 2.4%, 0.2%, 0.6%, and 0.8%, the absolute value is relatively small.(2) the stimulus of M2 on GDP and CPI is just a short-term effcet.(3) the stimulating effect of the M2 on CPI is greater than GDP. The impact on CPI last longer than GDP. Also M2 ?s contribution to GDP fluctuation is 40%, compared with 90% to CPI.(4) The correlation of M2 and GDP in recent years is stronger Whether M2?s lags or current.(5) Due to the controllability and correlation of M2 are not affected,.there is no need to adjust M2 diameter and it can still serve as the intermediate target of monetary policy.