The Test and its Applicability Analysis of Taylor Rule Based on 1998-2014 Financial Data in China

Taking China's monetary policy data as a sample from the first quarter of 1998 to the fourth quarter of 2014,this paper inspects the four forms of original Taylor rule and forward-looking Taylor rule,and further analyzes the Taylor rule in the long-term equilibrium relationship between variables through the cointegration test. Results show that China has similar Taylor rule,but it is unstable. Taylor rule in China is unadapted because of the multitarget system of China's monetary policy,the weak independence of the central bank,and imperfect interest rate marketization and the present condition of the financial system. Taylor rules as a tool and interest rates as a monetary policy operation variable are only the future choice of China's monetary policy.