Deflation On The Impact Of Interest Rate Transmission Mechanism Of Monetary Policy

This paper studies primarily on influence of deflation on interest rate transmission mechanism and effectiveness of China's monetary policy. Firstly, the paper introduces the new proceedings and practices of China's monetary policy. Then, as a theoretic basis, the paper makes clear several questions about deflation, including its definition, manifestations and harms to economy, and clarifies the framework of the interest rate transmission mechanism of monetary policy. Furthermore, the thesis analyzes in depth how deflation influences the related behaviors and conductive processes of the mechanism, studies how deflation influences the whole mechanism, and makes a theoretical and empirical study of deflation's influence over the effectiveness of monetary policy. It concludes that deflation makes the mechanism checked and thus weakens the effectiveness of monetary policy. Finally, the paper discusses how to make perfection the transmission mechanism in China, and proposes several suggestions of China's monetary policy.