Monetary Policy Transmission Mechanism Is A Comparative Study

The People's Bank of China started to play a real Central Bank' s role in 1984, and established central bank operation mechanism. From then on, monetary policy has been implemented in China. But until now, the managed-floating exchange rate mechanism (in fact, more management than floating) , together with interest rate control in China, has made monetary transmission mechanism different from that in other countries. The Non-Performing Loan and unreasonable property right regime in banking system have negative effects on the effectiveness of monetary policy. Referring to monetary policy transmission mechanism in industrial countries , and analyzing the shift of monetary policy transmission mechanism in emerging market economies, we can explore monetary policy transmission mechanism in China now and the possible development in the future, which can guide the monetary policy practice in China.Based on the comparative studies on industrial countries and emerging market economies, this thesis employs econometric methods to analyze the effectiveness and the appropriation of monetary policy, and the design of monetary policy framework in China. We focus on the comparisons of different transmission tunnels, to find out the barrier of monetary policy transmission mechanism in China, and put forward policy proposals against these problems.Main contributions are as follows:By elasticity analysis approach, this thesis compares the empirical economic data of United States, Canada and China, concludes that monetary policy is short-run non-neutrality and long-run neutrality. From a long perspective view, the development of economy depends on the improvement of productivity, and the aim of monetary policy is to provide a stable financial environment.A VAR model is used to study the effects of monetary shocks in the United States, the United Kingdom, Japan and Korea, and to compare their monetary policy transmission mechanism. The results suggest that in developed market economy countries, monetary policy is mainly transmittedby price (interest rate) channel; while in emerging market economies, the transmission mechanism is uncertain in the transformation process from quantity channel to price channel.Granger causal test and cointegration analysis method are used to test the monetary policy transmission mechanism in China, and emphasizes that credit channel and money channel are main ones in China.By comparing the velocity of money and the monetization degree of economy in different countries, this thesis demonstrates that the velocity of money in China is comparatively low and the monetization degree of economy is fairly high, these may result in the whole payment risk in China and hidden impediments in economy development. In order to improve the effectiveness of monetary policy and accelerate economy growth in China, we can make more efforts on monetary transmission tunnels smoothness, capital market development and the liberalization of interest rate besides expanding money supply to increase demands.