Research on the Effect of Targeted RRR Cuts on Agriculture—Based on the VAR Model

In recent years, in order to adapt to the market mechanism and monetary structure defects in China, the People's Bank of China (PBC) has used structural monetary policy to adjust it several times. The aim of this study is to investigate the effect of structural monetary policy on agricultural development by taking targeted RRR cuts policy as an example. The relevant data was selected from the gross agricultural production, agricultural loans, and agricultural investment of China in the years from 2003 to 2017, using the VAR model to analyze the effectiveness of the targeted RRR cuts monetary policy. Results showed that the implementation of targeted RRR cuts is generally effective for agricultural development, having a significant role in promoting agricultural loans, agricultural investment, and the growth of gross agricultural production. Meanwhile, as time went on, its effect would weak. This study illustrates that it is necessary to guide financial institutions to follow the monetary policy, reform the financial operation mechanism, clarify the "target" of the policy, comprehensively use a variety of structural monetary policy tools, and closely cooperate with structural monetary policy and fiscal policy, as so to expand and promote the effect of structural monetary policy.