Research On The Effect Of China’s Population Aging On The Effectiveness Of Monetary Policy

With the development of reform and opening up,the economy in China has been increasing for more than 30 years and China has became the world’s second largest economy.Due to basic state policy of family planning,population structure in China has consequently changed: The working-age population has been falling continuously since reached the highest level in 2013,while the dependency ratio has been rising continuously.The era of the "demographic bonus" is disappearing,the population aging trend is accelerating,and China is gradually entering an aging society.The aging of population is accompanied by a series of problems such as weakening consumption power,declining labor supply,and increasing government fiscal expenditures,which has became an important variable affecting the economic development in China.Monetary policy has always been a significant way for macro-economic control.How the central bank affects market liquidity through appropriate monetary policy and regulates the healthy and stable development of the economy has always been a high concern of the government.In 2004,Zhou Xiaochuan,the Governor of the People’s Bank of China emphasized at the meeting: "When studying the issue of monetary policy transmission mechanism,we should pay attention to the effects of population aging and the social security system on the implementation of monetary policy”.The efficiency of monetary policy directly affects the stability of the currency market and directly affects the state of economic development of the country.This article attempts to clarify the key elements in the transmission process of monetary policy,and analyze how the population aging will affect the instruments 、intermediate objective and final objective of monetary policy and contribute to improving the efficiency of China’s monetary policy in the future.This article summarizes and briefly evaluates current researches about the effects of population aging on the efficiency of monetary policy after analyzing and sorting out relevant researches at home and abroad.In the part of theoretical analysis,this article elaborates the current situation、the feature and the trend of the population aging in China and introduces China’s monetary policy in different stage、instruments and intermediate objective of monetary policy.Based on the above theory,this article analyzes the theoretical mechanism of how population aging exerts effect on monetary policy from interest rate transmission channels and credit transmission channels.In the part of empirical tests,this article selects the relevant economic data from 1994 to 2018,and proves the influence of population aging on the implementation of monetary policy in China by constructing empirical models.Finally,through theoretical analysis and empirical test results,this article puts forward policy recommendations for the implementation of monetary policy in China under the trend of sustainable development of population aging in China.