Interest rate liberalization and monetary policy effectiveness

摘要

To analyze and predict the liberalization of interest rate on economic structure and monetary policy effectiveness in China, this paper build a dynamic stochastic general equilibrium model which based on the new Keynesian theory of price stickiness. By calibration and Bayes estimation, the steady-state equation, impulse responses, and numerical simulation, the empirical results show that, firstly, the rise of real deposit rate and capitals marginal cost suppress investment and capital growth and increase the household consumption ratio, which will optimize the economic structure and promote sustainable economic development; secondly, the rise of interest rates can lower fluctuation, promote economic development, and enhance the defense ability against external shocks; thirdly, with the rise in nominal deposit rates, interest rate shocks on the real economy is gradually increased.