Regional Differences Of China's Monetary Policy Transmission

With the development of the socialist market economy, monetary policy has been playing a more and more outstanding role in macro-regulation. However, when we think of the actual effects which come forth in the process of monetary policy's implementation, we notice that the regional different effect of the policy, which means the diversities of feedbacks (including the outputs and prices) and time lag when different areas are faced with the same monetary policy, is quite prominent in our country. The existing diversities have weakened the implementation effect of monetary policy, and sometimes they actually distort the eventual goal of balanced development, which becomes a crucial obstacle in the process of efficient implementation. How to realize and solve the problems about regional different effect of monetary policy has become not only a common issue to which both policy-makers and scholars pay their attention, but also a basis on which to write this thesis.The core of this thesis is the regional different effect of China's monetary policy and it's forming mechanism. The analyses are as follows.First, the author summarizes the literatures of related researches(does a literature review) on monetary policy, including the research angles and existing problems to analyze/understand consumer pattern, investment action and how the development of financial level and structure have influenced the conductive effect of monetary policy. After summarizing the overseas researches, the author sums up a few related researches in China and finds that the past researches on monetary transmission mechanism have focused on the response of aggregate variables to monetary shocks and on measuring the efficiency of various channels of transmission mechanism. But there are only a few papers studying the impact of monetary policy shocks on regional and sectoral output.In order to analysis whether the regional different effect of China's monetary policy actually exists, a few of factors are provided which may bring in the regional different effect in brief, including consumer pattern, investment action, the development of financial level and structure and their openness, and existence of the effect is confirmed through a VAR model.Which of the factors mentioned above have led to the regional different effect? It is discovered that industrial composition plays the most important role in explaining the phenomenon via empirical study, the second industry and the real estate are more sensitive to the change of monetary policy, while the first industry, tertiary industry and the wholesale and retail are torpid.Since the manufacturing dominates the industry, its sub-industry is put under in-depth study in order to get a comprehensive understanding and find interesting results.Although industrial composition plays the most important role in explaining regional effect, this factor can't account for all. Other factors are further investigated, and it is found that the consumer pattern and the local development of financial level and structure also contribute to the regional effect.Last, conclusions are drawn and some overseas experiences on how to reduce regional effects of the uniform monetary policy are given.