An Analysis Of The Effect Of RMB Exchange Rate Formation Mechanism Reform On The Effectiveness Of China's Monetary Policy

The effectiveness of monetary policy affects the effect of macroeconomic regulation and control,and the evaluation of the effectiveness of monetary policy is to evaluate the effect of monetary policy implementation.With the deepening of RMB exchange rate formation mechanism reform,according to the theory of "ternary paradox" and M-F model,monetary policy varies in its independence and effectiveness under different exchange rate regimes.It has yet to be verified whether the effectiveness of China's monetary policy is consistent with the theoretical expectation and changes.This paper divides the data based on the history of China's exchange rate reform,and by using different period monthly data of the VAI?CPI and M2 and using VAR model to analysis the relationship between the money supply?output and prices in order to analysis the effectiveness of our monetary policy.Through the analysis of different period models we conclude that: Our monetary policy is effective.In addition,after the reform,the output and price effect of monetary policy is more obvious than before which indicates that the effectiveness of monetary policy has improved.At the end of this paper,the relevant policy recommendations are put forward from three aspects according to the conclusion of this paper of which are exchange rate system reform,opening of capital account and improving the effectiveness of monetary policy.