Mixed-frequency research on China's optimal flexible and time-varying monetary policy rules based on flexible loss function

Since entering the new era, the Chinese government has repeatedly proposed the dual interval goals of inflation and economic growth. The article proposes an optimal flexible time-varying monetary policy rule model based on a flexible loss function, and the mixed-frequency mixture innovation time-varying parameter vector regression model with stochastic volatility (MF-MI-TVP-SV-RM) is newly constructed for mixed-frequency measurement. Variable coefficients, which make it has four aspects of flexible time variation in function, rule, coefficient and frequency, then mixed-frequency select and measure the optimal flexible time-varying monetary policy rule which is suitable for China's new era from 32 representative rule forms. Empirical analysis shows that: First, compared with the constant coefficient and the time-varying Taylor rule, the interest rate smoothing coefficient of the optimal flexible time-varying monetary policy rule has significantly smaller scale and fluctuation range, and presents flexible time-varying features; Second, the optimal flexible time-varying monetary policy rules have flexible and time-varying positive-sensitive asymmetric inflation gap preferences. And basically presents a procyclical feature; Third, the optimal flexible time-varying monetary policy rule has the flexible time-varying wide-span symmetric zones interval of the output gap preference and exhibits a cyclical alternating periodicity; Fourth, the optimal flexible monetary policy rule has a linear Philips curve characteristic and the rule coefficient tends to be stable after entering the new normal state. To this end, this paper proposes some policy recommendations. © 2020, Editorial Board of Journal of Systems Engineering Society of China. All right reserved.