Title: The Optimal Enactment and Choice of Monetary Tools Rules on Dual Objectives
Abstract: As two kinds of monetary policy tools,monetary base and short-term interest rate are significantly correlated with real GDP growth and inflation.Therefore,the central bank can set monetary policy rules to meet the dual objectives by the two required tools.Under the restriction of the two kinds of rule,the responses of interest rate to the bias of inflation are greater than real GDP growth rate bias,while monetary base shows a higher sensitivity to real GDP growth rate bias.Monetary base rules can be achieved reverse cycle regulation against the development direction of economic,while interest rate rules are shown cyclical adjustment feature.In achieving economic growth and price stability,the target value of rules can be set in a point or an interval.Because the point target may lack of flexibility in operation,so the target value of rules should be set in a interval.In the choice of monetary tools rules,monetary base rules is more suitable for the specification of China's monetary policy operation than interest rate rules.
Publication Year: 2010
Publication Date: 2010-01-01
Language: en
Type: article
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