The Study of the Efficiency of China’sCurrent Monetary Policy Regulation——An Empirical Analysis Based on data from the Last 17 years
CHENG Gui1 ,WAN Jie-qiu2,LI Meng1
1. China Northwest Center of Financial Research, Lanzhou University of Finance and Economics, Lanzhou 730020, China ;2.Dongwu Business School, Suzhou University, Suzhou 215000, China
Abstract Based on quarterly data from the year 1998 to 2014, this paper adopts stochastic frontier analysis (SFA) which belongs to transcendental functions to estimate the true level of the efficiency of monetary policy. Empirical studies show that economic growth and price stability have the equal weight within the integrated variable of China's monetary policy. Compared to interest rate, money supply M2 has greater impact on the integrated target variable of monetary policy. The overall level of China's monetary policy efficiency is not high, the regulation effect of monetary policy has not been fully used, and there is a big gap between the preset objectives of the policy and the actual results. In order to improve the efficiency of monetary policy regulation in China, the policy regulation should be adjusted in the following aspects: (1) to reshape of the monetary policy framework and introduce flexible inflation targeting within the existing monetary policy framework. (2) To further promote the reform of interest rates and dredge transmission mechanism of monetary policy. (3) To deepen the reform of the RMB exchange rate formation mechanism, introducing more market-based mechanism.
CHENG Gui,MO Jie-Qiu,LI Meng. The Study of the Efficiency of China’sCurrent Monetary Policy Regulation——An Empirical Analysis Based on data from the Last 17 years. Economic Survey, 2016, 33(4): 0150.
2016, Vol. 33 
