Can Aggregate Financing To The Real Economy Be The Intermediate Target Of China's Monetary Policy

The intermediate target of monetary policy is the bridge between monetary policy instruments and the realization of monetary policy objectives.In the process of policy tools to achieve the objectives of the policy,the central bank must be based on the intermediate target to determine whether the policy objectives to achieve effectively,so the monetary policy intermediary target plays an important role.The choice of intermediate target is generally based on the specific economic and financial environment,or whether the selected indicators can accurately reflect the effect of policy implementation.due to China's economy,society and policy changes,so the choice of monetary policy intermediary target has also experienced a few the evolution of the stage,the establishment of the cash plan and the credit plan from 1984 as the intermediate target,and the practice of starting the money supply as the main intermediate target in 1998 is sufficient to show that the credit scale has played an important role in the intermediate target system and has experienced the transition from a mandatory plan to a guiding plan.With the constantly emerging of financial innovation tools in recent years,increasing the substitution between financial assets,and a variety of high liquidity financing means of financial innovation,making the market no longer rely solely on bank loans;and the instability of the flow of money,resulting in financial innovation and the endogenous nature of money supply weakened the monetary policy and credit scale as the intermediate goal of the implementation of monetary policy basis,that making the intermediate target and the relationship between the output of money tools change is also unstable,while also reducing the ability of the central bank to control intermediate targets.In this context,aggregate financing to the real economy(AFRE)has embarked on the stage of history,it covers the financial institutions inside and outside the table of business,direct financing and other support for the real economy information,not only incremental and inventory indicators,but also sub-regional structure The multi-dimensional details reflect the financial support for the real economic sector and the region.So,AFRE to replace the scale of credit,and with money supply forming a "two intermediate goals,two transmission mechanism" model of monetary policy is an inevitable trend.In order to verify AFRE alternative credit scale,and with money supply forming a "two intermediate goals,two conduction mechanism" model monetary policy is reasonable.In this paper,the monthly data of the base currency,the weighted average lending rate,AFRE,the RMB loan,M2,the CPI and the industrial added value from 2002 to 2016 are selected as the sample data,and the use of eviews7.2 and other statistical software,from the controllability,relevance and testability of the three angles,studying the feasibility of AFRE(flow)and RMB loans as a monetary policy intermediary objectives,then studying the property of intermediate target of AFRE(stock)and M2,lastly making the relevant recommendations.The article contains five parts.The introduction is the first part of the paper,mainly explaining the research background and significance,carding the research status of domestic and foreign,briefly introducing the research content and the method as well as the article innovation and the insufficiency;the second part is the theory summary,mainly from the angle of debt and asset side,introducing the mechanism of monetary policy transmission,and introducing the connotation of monetary policy intermediary from definition,theoretical basis and selection criteria,and introducing the origin,concept and statistical principle of AFRE.The third part and the fourth part are the empirical part of the article and the key part of the article.The third part mainly chooses the index of AFRE(flow),new RMB loans and the base money,interest rate,CPI and the industrial added value for the analysis of the unit root test,cointegration test,impulse response,think that AFRE(flow)meeting the controllability and relevance requirements of monetary policy intermediary objectives,and through the testability theory,find that AFRE(flow)replacing the new RMB loans as a monetary policy intermediary objectives is possible.The fourth part uses the VAR model to study whether AFRE(stock)and M2 are similar to the attributes(controllability and correlation)of the monetary policy intermediate target,and uses the theory to analyze the testability of both.Finally,the conclusion is that AFRE(stock)has a stable correlation with the macro-economy,and the central bank also has the ability to control AFRE.AFRE and money supply constitute the intermediate target system,together as the conveyor belt of achieving economic growth and price stability that is implemented by the central bank.The last part of the article summarizes the research results in the previous section of this paper,finding that the optimal choice of intermediate target,and making suggestions for the selection of intermediate target of monetary policy in China.