Research On Asymmetry Of Monetary Policy Effects In China

Research on asymmetry of monetary policy effects is an important aspect of monetary economics as well as macro-economics in recent years.Research on the asymmetry of monetary policy effects can guide the practical monetary policy as well as improve the credibility and effectiveness of monetary policies.Study about this asymmetry can provide a basic framework to be observed on the operational mechanism of monetary policy and enable people to measure the actual role and reason of the monetary policy.Therefore,understanding the effect of monetary policy is important and meaningful.Since the 1990s,with the reform of the banking system,monetary policy as an important means of macroeconomic regulation and control gradually began to play a role in our country.However,central bank is lack of independence and the autonomy. Monetary policy has many ultimate objectives such as price stability and economic development and has many intermediate objectives such as money supply and exchange rate stability.In addition,because of asymmetric information and future uncertainty, commercial banks,enterprises,residents act more cautiously in economic contraction than in economic overheating during the economic transition,resulting in the asymmetric effects of monetary policy.In addition,China's monetary policies act with discretion and response to the changes of economic conditions with obvious time-lags and even increasing the uncertainty of the economy and invalidity of monetary policies.Therefore, some scholars have put forward monetary policies cannot work to economy recovery. They don't recognize the real role and content of monetary policy in fact.Hoping monetary policy can solve all the problems is a little unrealistic and sometimes guiding the economy in practice with this belief may be counter-productive.Research on the asymmetry of monetary policy effects is at the initial stage.There is no systematic theory to discuss and analyze this issue and this study attempts in this regard. The study starts from the transmission mechanism of monetary policy and analyzes economic agents' behavior at the various stages of transmission mechanism based on IS-LM framework.Economic agents' asymmetric reaction leads to asymmetry of monetary policy effects.In addition to money supply shocks asymmetry,asymmetric money demand is analyzed,too.This study not only analyzes asymmetry of monetary policy effects longitudinally,but also analyzes asymmetric effects horizontally.Chapter 1 summarizes and cards the relevant literature on the asymmetry of monetary policy effects systematically,where latest developments and defects are introduced.The purpose is to grasp the leading edge,which is a basis for further study in this article.Chapter 2 introduced monetary policy transmission.This includes the different transmission channel such as the interest rate transmission channel,exchange rate transmission channel,assets price transmission channel and credit transmission channel. Monetary policy tools in monetary,policy transmission are introduced.Analysis showed that the monetary policy transmission process is the subject of different economic agents' game and the selection process.Inconsistent behavior of different economic agents in different economic conditions will lead to the asymmetric monetary policy effects.Chapter 3 analyzes the reaction of economic agents in the course of the monetary policy transmission.Based on the IS-LM framework the paper summarize factors of monetary policy to output.Response modes of central bank,commercial banks, enterprises and residents are analyzed.The diversity and uncertainty of central bank's intermediate objectives and ultimate goal are bound to lead to asymmetric effects of monetary policy.Because of region differences in the economic development,the changes of different economic indicators are not synchronized.Therefore,these asymmetries include longitudinal and horizontal asymmetries.Chapter 4 analyzes the longitudinal asymmetry effects of the expected and the unexpected monetary shock on output,the various components of the output (consumption,investment and exports) and prices.Empirical results show that asymmetric monetary policy effects are from investment and export.At the same time,the asymmetric price reaction indicates the existence of price rigidity,so that the effects of monetary policy can not be fully delivered to output.Chapter 5 analyses the horizontal asymmetry such as the industries asymmetry, regional output asymmetry and asymmetric reaction of regional prices.The impact of monetary policy shocks on the second and third industries is greater than on the primary industry.The impact of monetary policy shocks on the output of the eastern region is greater than central and western regions'.There is panel co-integration in the price and loans of different provinces,Monetary policy impact on the eastern price is less than the central and western'.Chapter 6 analyses asymmetry of monetary policy effects from the perspective of money demand.Although money demand is stable in the long run,the adjustment of money demand is asymmetric and satisfy the non-linear error correction model in the short term.Even if the money supply has symmetric monetary policy effects,money demand as a balance force will result in asymmetric monetary policy effects,Asymmetry of monetary policy effects may be from asymmetric demand for money.Chapter 7 is the conclusions of this paper.Monetary policy can achieve the goal of China's economic development or not is up to that we understand monetary policy effects exactly.Monetary policy effects have longitudinal and horizontal asymmetry.Rather than monetary policy does not work,we might as well say asymmetric monetary policy effects. Because of the asymmetry,monetary policy effects may be relatively small in the economic expansion,so we need to change the monetary policy objectives framework. The regional asymmetry of monetary policy effects requires the economy regulation must take the development level of different regions and different sectors into account.Only in this way can we ensure development of every sector and region coordinately.