Inflation Targeting and The Choice of Chinese Monetary Policy:Based on the Flexible Target Rules' Framework

This paper analyzed the effect of inflation targeting which based on flexible target rules and the general equilibrium analytical framework from theoretical and empirical direction.The results were as follows:the inflation targeting has an advantage over other rules in reducing inflation.In order to verify the suitability of inflation targeting as an optimal monetary policy in China,this paper analyzed the necessary conditions for the implementation of inflation targeting,such as the Central Bank independence,the short-term monetary policy tools and transmission mechanisms,market-oriented interest rate and inflation indicators.It found that the inflation targeting is not a suitable optimal monetary policy choice for Chinese monetary authority at present.But the inflation targeting will be a good choice in the long run.