Research on the effectiveness of China's monetary policy

Author: Cui Jianzhen
Publisher:
Publish Date: 2006-01-01
Features: With the increase in the dependence on central government debt and the diminishing effects of large-scale fiscal infrastructure investments, as well as the emergence of the "crowding-out effect," active fiscal policy should gradually withdraw from the historical stage, with monetary policy taking the sole responsibility of stimulating domestic demand, promoting economic growth, and even adjusting economic structures. As a result, monetary policy and its effectiveness have become pressing and challenging issues in China's financial sector and macroeconomic field. This book for the first time proposes and comprehensively argues the three theoretical prerequisites for the effectiveness of monetary policy: the nature of money, the nature of money supply, and the value of the Phillips curve; corrects Friedman's authoritative view that the evaluation standard of monetary policy is the money supply; establishes a theoretical model of monetary policy effectiveness in China with monetary policy objectives as the explanatory variable, and conducts empirical analysis based on China's specific conditions; analyzes the constraints on the effectiveness of China's monetary policy—the negative impact of the credit concentration in state-owned commercial banks and the "counter-flow" of funds within the system on the effectiveness of monetary policy—and proposes ways to enhance the effectiveness of China's monetary policy.