The Research On The Applicability Of Forward-looking Taylor Rule To Chinese Monetary Policy In The Open Conditions

Since 1996,China began to use the money supply as an intermediate target of monetary policy,and began to use monetary policy as the main mode of monetary policy.However,with the continuous emergence of financial innovation,especially the rapid expansion of shadow banking in recent years,The emergence of financial disintermediation has made it increasingly difficult for the central bank to monitor liquidity.As a result,more and more scholars believe that the money supply is no longer suitable as an intermediary target.From a worldwide point of view,not only the central banks of the developed countries such as the Federal Reserve Bank of the United States,the European Central Bank,and the Canadian Bank,but also the central banks of emerging market countries such as Brazil and Colombia have all turned into price-based adjustments based on interest rates.Take regular monetary policy operations.At present,China is in the stage of transition from quantitative regulation to price-based regulation.As the most representative price-based monetary policy rule,the Taylor Rule has obvious effects in improving the independence and transparency of the Central Bank and strengthening the prospective management.It is of theoretical and practical significance to discuss Taylor rule's applicability to China's monetary policy.This paper begins with the theory of monetary policy rules,first reviewing historical debates on camera choices and monetary policy rules;then using mathematical economics to prove that central bank losses under policy rules are less than camera choices,so theoretically regular monetary policy The operation is better than the camera choice;then the main monetary policy rules are introduced,and the policy implications and advantages and disadvantages of each monetary policy rule are separately introduced.Then it elaborates in detail the six principles that a country's central bank needs to follow when designing monetary policy rules,and summarizes the central bank's monetary policy operation framework under policy rules.On the basis of theoretical analysis,based on the conditions that Taylor rule needs to satisfy,based on the national conditions of the country,the applicability ofTaylor rules to China's monetary policy is analyzed.The results show that our country can basically meet the application conditions of Taylor rule.Then,based on the original Taylor rule,a monetary policy response function is constructed to conduct an empirical analysis.The results show that the extended Taylor rule is applicable to China's monetary policy.At the same time,the following conclusions are also drawn:There is a significant interest rate smoothing in China's monetary policy operations.Characteristics,the central bank's decision-making behavior is consistent;China's interest rate regulation can stabilize inflation and output,but China's central bank does not pay sufficient attention to asset prices;changes in real effective exchange rates are significantly negatively correlated with interest rates.And the larger coefficient of response indicates that China's interest rate policy responds positively to changes in exchange rate.Finally,based on the conclusions obtained and the application conditions of the monetary policy rules,this paper puts forward relevant countermeasures and suggestions.